Understanding the concept about Commodity Derivative Market
Commodity Derivative Market: It's a place where investors can directly trade contracts based on commodities like gold, oil, or agricultural products. These contracts are settled in the future, and they help manage risks associated with price fluctuations. Need for Commodity Derivative Market: There are two main needs - (a) Hedgers use it to reduce risk and protect themselves from price changes in commodities they deal with, and (b) Convenience seekers use it for easy access to trading and efficient clearing systems. Features of Commodity Derivative Markets: It complements investments in companies that use commodities, gives insights into a country's production and consumption patterns, and offers gains through price increases. Difference between Spot Market and Derivative Market : In the spot market, buyers and sellers directly deal with each other, while in the commodity derivatives market, trading happens anonymously on stock exchanges using standardized contracts. ...