Commodity Options
A commodity option is a type of derivative contract that gives the buyer or seller the right, but not the obligation, to buy or sell a specific commodity (such as copper or zinc) at a pre-agreed price and date. In exchange for securing this right, the buyer pays a premium to the seller. If the buyer decides not to exercise the option, they are not obligated to execute the trade, but they forfeit the premium paid. Commodity options provide traders with flexibility, allowing them to hedge against price fluctuations or speculate on future price movements in commodities.
Related Terms
Book Value
For a company, the book value refers to its Net Asset Value (NAV), which is...
Ask Or Offer Price
The ask or offer price is the price at which a seller is willing to...
Bottom Up Investing
Bottom-up investing is a stock selection approach that prioritizes the detailed analysis of individual companies...
Equilibrium Price
Equilibrium price occurs when supply matches demand perfectly, balancing the market. At this point, buyers...
Bottom Line in Finance
In finance, the 'bottom line' refers to a company’s key metrics, such as earnings, profits,...
Filing
Filing refers to submitting essential documents to SEBI before an Initial Public Offer (IPO). This...
