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.
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