contracts in which sellers promise to deliver a given commodity by a certain date at a predetermined price. Price is agreed to by open outcry on the floor of the commodity exchange. The contract specifies the item, the price, the expiration date, and a standardized unit to be traded (e.g., 50,000 pounds). Commodity contracts may run up to one year. Investors must continually evaluate the effect of market activity on the value of the contract. While the futures contract mandates that the buyer and seller exchange the commodity on the delivery date, the contract may be sold to another party prior to the settlement date. This may occur when the trader wants to realize a profit now or limit the oss. Investors engage in commodity trading in the hope of high return rates and inflation hedges.
contracts in which sellers promise to deliver a given commodity by a certain date at a predetermined price. Price is agreed to by open outcry on the floor of the commodity exchange. The contract specifies the item, the price, the expiration date, and a standardized unit to be traded (e.g., 50,000 pounds). Commodity contracts may run up to one year.
