Futures and options markets in the international cocoa trade
This chapter provides an outline of the cocoa futures and options markets together with the difference between them and the physical market, their use in price discovery and price-risk mitigation of physicals with examples of hedging and their use in structured finance. The structure of futures is discussed, including the essential connection with the physicals market and how that connection is maintained by delivery of physical cocoa. Regulation and the role of different market participants is also described.
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