Derivatives

Definition of a "Commodity"  Commodity Exchanges            Derivatives  Types of Traders in a Derivatives Market    If the trader’s judgement is good, he can make more money in   the futures market faster because prices tend, on average,   to change more quickly than real estate or stock prices.       Futures are highly leveraged investments. The trader puts   up a small fraction of the value of the underlying contract   as margin, yet he can ride on the full value of the contract as   it moves up and down. The money he puts up is not a down payment   on the underlying contract, but a performance bond. The actual   value of the contract is only exchanged on those rare occasions   when delivery takes place.      {text:bookmark-start} {text:bookmark-end} Arbitrators :

According to dictionary definition, a person who has been officially chosen to make a decision between two people or groups who do not agree is known as Arbitrator. In commodity market Arbitrators are the person who take the advantage of a discepancy between prices in two different markets. If he finds future prices of a commodity edging out with the cash price, he will take offsetting positions in both the markets to lock in a profit. Moveover the commodity futures investor is not charged interest on the difference between margin and the full contract value.  Definition of future contracts    If price moves are favourable, the producer realizes the greatest   return with this marketing alternative.       No premium charge is ass ...
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