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Trading Commodities and Financial Futures: A Step-by-Step Guide to Mastering the Markets, Third Edition by George Kleinman

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The players

The two major classes of participants in the futures and options markets are the hedgers and the speculators.

Hedgers can account for from 20 to 40% of the volume and open interest in the major futures markets and up to half or more in some of the smaller contracts. Hedgers use exchange traded contracts to offset the risk of fluctuating prices when they buy or sell physical supplies of a commodity.

For example, a copper mining company might sell copper futures to lock in a sale price today for its future production. In this way, the company protects its profit margins and revenue stream should future copper prices drop. Should future ...

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