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My opinion is that they're not. Millions of people have tried speculating in the commodities market and gotten taken. Two reasons exist for this. First of course is the fact commodities change price all the time. And second is the reality of a futures contract: by entering into one, you guarantee you will buy whatever it is the contract says you will, on the date it says on the form. So you have a July wheat futures contract that's marked for 600 cents per bushel, wheat is selling for 500 cents per bushel, the bakers and millers know you have nowhere in your house to store 150 tons of wheat, and it's June. "Well gee Mr. Speculator, too bad about the price of wheat, I'll take that contract off your hands for...oh, 485 cents per bushel." You of course still need to pay the man with the five truckloads of wheat 600 cents per bushel.

Options contracts, by comparison, have a LOT of uses to an investor. You can use them to stop losses or lock in gains. You can buy stock cheap with them.

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11y ago

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