Agri Commodities Fund vs. Futures

[pkspeaker]

If you were expecting the price of a said commodity price to increase, better to get an etf or a future?

[tonray]

Futures contracts have an expiration date and by their nature use inherent leverage. So you risk being wrong and losing money, or being right but not in the proper time frame and still losing money. But the advantages are you can control the right to delivery or sale of a commodity for a fraction of the real cost....having said that....if you need to ask that question....stay away from futures and options contracts until you gain more knowledge of them.

most ETFS that track an underlying commodity use futures contracts to do so but they are controlling the expiration risk by rolling forward expiring contracts so you don't have to.

In short...use the ETF for now !

[AyG]

Better get an option. That way if your magical crystal ball is having an off day your down side is limited.

[fletchsmile]

Assuming you're talking Thailand, you'll most likely be limited by the Agricultural commodity you want to trade.

As far as I know there are no Thai agricultural commodity ETFs although there are commodity ETFs based on gold bullion

Agricultural futures in Thailand aren't a particularly great market either - often not that liquid. Think also about the delivery aspect if you're unable to close out before the settlement date.

In all likelihood neither are going to be particularly suitable to you in Thailand, unless you happen to be involved in the Thai agricultural farming market and want to hedge prices a little.

[puukao]

depends. futures give you way more leverage in the short term. but you likely don't mean tomorrow's prices..

so ETF probably better. They might have a 3xBull ETF like they do on certain indices.

options way more complicated. strike price, gamma, delta, delta hedging....etc....time value, etc.....

all depends how much cash you can afford to risk.

if more than 100,000 USD, futures might be better. you could even spread using futures...calendar.

[AyG]

depends. futures give you way more leverage in the short term. but you likely don't mean tomorrow's prices..

so ETF probably better. They might have a 3xBull ETF like they do on certain indices.

2x and 3x Bull ETFs are dreadful products. The naive are sucked into believing they are going to get twice or thrice the rise (or fall) of a particular index. That just doesn't happen because they are revalued daily, so all falls (however transient) have a dramatic impact in performance. I find it difficult to find a case to justify using them - particularly for a medium or long term investment.