Bond futures are financial derivatives contracts that obligate the contract buyer to purchase, or the seller to sell, a specified amount of a particular bond at a predetermined future date and price. These futures contracts are traded on organized futures exchanges and play a crucial role in financial markets by providing a means for investors to hedge interest rate risk, speculate on future interest rate movements, and manage their bond portfolios.

Here are some key features and concepts related to bond futures:

1. **Underlying Asset:** Bond futures are based on a notional underlying bond or a basket of bonds. The specific bond or bonds are designated in the contract, and they often represent a specific maturity, issuer, or type of bond.

2. **Contract Specifications:** Each bond futures contract has standardized specifications, including the size of the contract, the quality and type of the underlying bonds, the contract expiration date, and the method of settlement.

3. **Contract Size:** The contract size is the nominal or face value of the bond specified in the futures contract. It determines the amount of the underlying bonds that the futures contract represents.

4. **Expiration Date:** Bond futures contracts have a fixed expiration date, after which the contract is settled. Traders can choose to close out their positions before expiration by entering into an offsetting trade.

5. **Delivery vs. Cash Settlement:** Bond futures contracts can be physically settled or settled in cash. In a physical settlement, the actual bonds are delivered to the buyer. In a cash settlement, the contract is settled by a cash payment based on the difference between the contract price and the market price of the underlying bonds.

6. **Mark-to-Market:** Bond futures contracts are marked to market daily. This means that gains or losses are calculated each day based on the current market value of the contract. Traders may be required to settle these gains or losses daily.

7. **Hedging and Speculation:** Participants in the bond futures market include hedgers seeking to manage interest rate risk and speculators aiming to profit from anticipated interest rate movements. Hedgers may include institutional investors, banks, and other market participants with exposure to interest rate fluctuations.

8. **Interest Rate Risk:** Bond futures are highly sensitive to changes in interest rates. As interest rates change, the value of the underlying bonds also changes, impacting the value of the futures contract.

It’s important to note that trading in futures contracts involves a significant level of risk and requires a good understanding of the market dynamics. Many investors, especially those not familiar with futures trading, may prefer to use bond ETFs or other fixed-income instruments for exposure to bonds without the complexity of futures trading.