Cash Commodity

Cash commodities, or actuals, are tangible goods (soooo 1900s) that are delivered as part of futures options. If it sounds old-school, it is...this is basically how futures contracts started.

Companies enter into contracts that say, "You give me x-number of y-things at z-date, and I’ll give you $mm.mm for it with an exchange clearing house as the middleman."

As you can see, if you think y-things are going to get more expensive, you can “lock in” buying at a lower price now, saving you money. Of course, a futures contract like this is only a good bet if you have reason to think that prices on y-thing will go up. If they stay the same, no big deal, but it prices go down, well…you just lost a bet. Speculate wisely, friend.