A Commodity is a raw or unprocessed material that can be bought or sold and is used to make something else that eventually is consumed. For example, wheat is a commodity that is used to make bread.Trading commodities is a popular way to invest in the stock market. When you trade commodities, you are essentially betting on the price of a raw material going up or down.
If you think the price of a commodity will go up, you can buy a “call” option. If the price of the commodity goes up, you will make money. If the price of the commodity goes down, you will lose money.If you think the price of a commodity will go down, you can buy a “put” option. If the price of the commodity goes down, you will make money. If the price of the commodity goes up, you will lose money.Commodities can be a volatile market, so it’s important to do your research before you trade.
A put option is a type of derivative security. It gives the owner of the option the right, but not the obligation, to sell a commodity or other security at a specified price within a specified time frame.