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. If you wish to consider trading in options on futures contracts, you should discuss the possibility with your broker and read and thoroughly understand the Options Disclosure Document which he is required to provide. In addition, have your broker provide you with educational and other literature prepared by the exchanges on which options are traded, or contact the exchange directly.