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As someone who is very interested in commodity futures, I have a few questions, which i will list below.
- How do you approach futures if you think this price is going down or going up?
- Are you able to exercise the future before expiry, like if it was set to expire in september, could you exercise it in like august if you think that's when the peak price is?
- How do CME futures and ICE futures differ? is it just different commodities offered?
- Can someone walk me through the profitability of a successful futures trade? For example, FCOJ futures go up 25% I understand that these futures have lots of leverage
- What factors into the price rises and falls of commodity futures?
- I've seen some things about weather derivatives. Are these used to hedge risk? What exactly are they even used for?
- Lastly, how do you find relative info on coffee and cocoa futures. Basically, how do you find get access to things like weather readings in places like ghana and the ivory coast where lots of it is grown? seems like very opaque.
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I used to think there was no such thing as a stupid question and then I saw this. For a guy who claims to be interested in commodities you have no willingness to use logic to work out basic things and use google to answer each question separately. I went through your other posts and it seems like somebody needs to be a dick since you just want to be spoonfed info.
Below is what you have for your post at the moment
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As someone who is very interested in commodity futures, I have a few questions, which i will list below.
How do you approach futures if you think this price is going down or going up?
Are you able to exercise the future before expiry, like if it was set to expire in september, could you exercise it in like august if you think that's when the peak price is?
How do CME futures and ICE futures differ? is it just different commodities offered?
Can someone walk me through the profitability of a successful futures trade? For example, FCOJ futures go up 25% I understand that these futures have lots of leverage
What factors into the price rises and falls of commodity futures?
I've seen some things about weather derivatives. Are these used to hedge risk? What exactly are they even used for?
Lastly, how do you find relative info on coffee and cocoa futures. Basically, how do you find get access to things like weather readings in places like ghana and the ivory coast where lots of it is grown? seems like very opaque.
There is no need to be rude though. Sure, you can find most of these questions on Google, but no need to talk down on him/her. Clearly he/she is very passionate about commodities and needs some guidance.
Agreed on the first part, had a shitty morning and misery loves company. Nonetheless this poster has put on a lot of questions the past couple weeks and they are all very basic questions a quick google search can answer. I'm sorry but the poster probably read that commodity traders make big money and then said I am passionate about it, by the way what is it and how does any of it work. It's like saying "I heard about a sport called basketball, I am very passionate about it. I have never seen it before nor have I played it". Anyways throw more MS because I don't know how to sugarcoat this except I agree that I am being harsh but I know it worked for me because the people who have jumped down my throat the most are also the ones who ended up helping out the most. Wasn't intended to be a screw you so much as you are on the basics still, I know you can do better. End rant
Bro. Start reading the derivatives book by John C Hull. I get the feeling you're mixing options with futures...
Most answers are answerable with a 5 seconds google search. I'm actually impressed you came up with the questions but never bothered to look for answers in a simpler way.
1. Fundamental Analysis. Varies on the commodity but it can boil down to supply and demand.
2. Most futures are exercised (edit: exercised isn't the 1:1 word, it's more like you close out so your position is 0) before expiry otherwise you take delivery
3. This one you can google
4. Futures are highly levered. So, if crude goes up $1/barrel, 1 contract makes $1000. Go on cme click on a future and go to contract specs
5. That's the job bro
7. Information is the name of the game.
I'm not sure that's the right terminology? Futures aren't an option you exercise. You can close out your position by taking the opposite side of your initial trade or hold until delivery but there is no 'exercising' per se.
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