Cash Commodity
Definition of 'Cash Commodity'In futures trading, the cash commodity is delivered for payments. In certain contracts, a party is obligated to physically deliver the actual cash commodity, such as soybeans, oil, or treasury bills. Other contracts can be cash-settled, meaning that cash changes hand, rather than the physical commodity. In contrast to cash commodities, delivery on future contracts typically happens at a later date. |
|
Investopedia explains 'Cash Commodity'A simplified view is that the futures market is comprised of two groups: speculators and hedgers. Speculators are looking to make profits by betting on price changes and have no interest in taking possession of the underlying commodities. Hedgers are firms which either produce or require the underlying commodity. They are often interested in taking or making physical delivery of the underlying commodity, at a specified price. For example, an airline may hedge its operating costs by using a futures contract to lock in the price on future delivery of jet fuel. |
Related Definitions
Articles Of Interest
-
Getting Started In Foreign Exchange Futures
Learn how these futures are used for hedging and speculating, and how they are different from traditional futures. -
An Introduction To Managed Futures
Their inverse correlation with stocks and bonds make these alternative investments worth getting to know. -
Futures Fundamentals
For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them. -
6 Asset Allocation Strategies That Work
Your portfolio's asset mix is a key factor in whether it's profitable. Find out how to get this delicate balance right. -
Should You Offer Alternative Investments?
Find out what problems arise for financial representatives when they start to diversify their client offerings. -
Nobel Winners Are Economic Prizes
Before you try to profit from their theories, you should learn about the creators themselves. -
Investing During Uncertainty
The inability to forecast future events can turn the markets upside down. Find out how to stay right-side up. -
An Overview Of Commodities Trading
Commodities markets, both historically and in modern times, have had tremendous economic impact on nations and people. Investing in commodities can quickly degenerate into gambling or speculation ... -
Investing In Fine Wine
If you fail to uncork profits in this market, you can always toast your loss. -
The Copper King: An Empire Built On Manipulation
Find out how Yasuo Hamanaka's actions in the copper market forever changed the rules for commodity traders.
Free Annual Reports