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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Tommaso who wrote (63299)	6/10/2006 4:12:03 PM
From: skinowski	Read Replies (1) of 110194

If I am a big producer of widgets (or gold, or corn) - and I know my cost of production, it makes sense for me to sell futures contracts on my product. I would not buy those futures back, but would settle them by delivering the product. In fact, if I refuse to sell forward any of my product - thinking that perhaps it will go up in price by the time it is produced - I am taking a risk. In this case I am acting not as a commercial hedger, but as a speculator.

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