Commodities futures are a type of financial derivative contract wherein the price reflects changes in the value of a commodity, such as metal or energy. Unlike most other types of investments, futures come with an expiration date, after which the contract is no longer valid. Accordingly, futures contracts with longer terms tend to be more expensive initially, as they have a longer period during which predictions can become true.
Futures contracts also do not require the sum total of the contract to be invested immediately; instead, potential buyers can use leverage. Leverage significantly increases both gains and losses on options by allowing the user to put up only a small fraction of the cost, magnifying both risk and reward drastically.
Futures and options trading involves risk of loss. Past performance is not indicative of future results. Only risk capital should be used.