Schaeffer Research - Comprehensive options site with educational information, news, commentary, and more. Reality Based Trading - Commodity futures trading for beginners. Introduction to Futures and Options - From the Futures Industry Institute. Commodities - A commodity is any physical substance, such as food, grains, and metals, which is interchangeable with another product of the same type, and which investors buy or sell, usually through futures contracts. The price of the commodity is subject to supply and demand factors.
Risk is actually the reason exchange trading of the basic agricultural products began.
For example, a farmer risks the cost of producing a product ready for market at sometime in the future because he doesn't know what the selling price will be. A speculator can pay the farmer or anyone else producing commodities because the speculator wants to make a profit. This is called trading in futures. Options are one type of derivative, because their value derives from the value of the underlier. For stock options, the amount is usually 100 shares.