Commodity futures and options

Before you open a commodity account, you need to know a little bit about derivatives. There are two main types of products – futures and options. Futures contracts give you the right to purchase or sell a certain amount of a particular commodity at a predetermined date in the future. Options give you the right, but not the obligation, to buy or sell a specific commodity at a predetermined price in the future.

Futures and options are traded on commodity exchanges like Multi-Commodity Exchange (MCX) and National Commodity and Derivatives Exchange (NCDEX). Only members (brokers) are allowed to trade on these exchange, so you need to open commodity trading account with a broker like AngelBroking.