Definition of 'Commodity Option'
A contract that grants the holder the right, but not the obligation, to buy or sell Commodity at a specified exchange rate during a specified period of time. For this right, a premium is paid to the broker, which will vary depending on the number of contracts purchased. Commodity options are one of the best ways for corporations or individuals to hedge against adverse movements in
exchange rates.
A contract that grants the holder the right, but not the obligation, to buy or sell Commodity at a specified exchange rate during a specified period of time. For this right, a premium is paid to the broker, which will vary depending on the number of contracts purchased. Commodity options are one of the best ways for corporations or individuals to hedge against adverse movements in
exchange rates.
