Futures allow traders to speculate on what the price will be at a certain date. For example, if oil currently trades at $40, but a trader believes it will increase to $50 in two months, they can use futures to engineer a profit. If the price does reach $50 in two months, they can immediately sell for a $10 profit. If it falls short of $40, the contract is worthless.
No, futures are symmetric. Price drops to $30 in the above example and you lose $10 a barrel.
It is options which are asymmetric. They do expire worthless if out of the money.
Seriously, someone writing the newspapers should know the difference.
By agreeing to buy one type of oil contract at the end of the day and selling another, they profited when the price went into freefall. But they hit the jackpot twice: as futures prices plunged into negative territory, the traders were reportedly paid huge sums for buying contracts they had already agreed to when prices settled at -$37.63 at the end of the day.
And what the hell does that mean? Of course they were paid for their contracts. Futures are – in near all markets at least – cash settled.