What are commodity futures and options?
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Commodity market traders use Futures and options commodity trading contracts. Traders who enter into futures contracts agree to buy or sell commodities on a fixed, future date, at a fixed price, irrespective of the commodity’s market price on the contract maturity date. Traders can also enter into options contracts with more or less the same conditions as the futures contract. However, commodities options traders have the right or option to exit the trade if it does not prove profitable. Such traders must pay a margin while entering into the contract and forfeit the margin if they choose to exit the contract.