What are Commodity Futures and Options?
Commodity futures and options are financial instruments that allow investors to hedge against price fluctuations in underlying assets. They provide a way for traders to speculate on the direction of prices while limiting their potential losses.
There are two main types of commodity futures and options trading: spot and forward contracts. Spot contracts are settled immediately, while forward contracts are settled in the future.
Investors can use various strategies to trade commodity futures and options, including market-making, position-taking, and hedging. Market-makers provide liquidity to the market, while position-takers speculate on price movements.