Commodities

I love commodities and have been trading them since 2000. When I first started the only way you could buy commodities was by owning a futures contract or to purchase an option. I assume we all know what commodities are but here is a list of the ones that I watch and trade the most:

Coffee
Sugar
Corn
Oil
Gold
Cotton
Orange Juice
Wheat

Most of the time I simply trade options. You can make it complicated or simple, and I prefer simple. I don't get into selling puts or calls. If I think the market is going up I will buy a call option. If I think it is going down I will buy a put option. This way I can never loose more than my initial investment. Most times I will pick up a option on the other side for insurance in case the market moves the other direction. A caution with options. You want to exit your positions around 30 days before they expire. Otherwise if they are out of the money they end up worthless. Remember options are time sensitive. Like all investments you must have a game plan which includes an entry and exit strategy.

Now we have another option to trade these markets with out actually leveraging the physical commodity. You can by ETF's (exchange traded funds) These trade just like stocks on the NYSE exchange. Here is a list of a few of them.

• Natural Gas (NYSE: UNG)
• SPDR Gold Trust (NYSE: GLD)
• iShares Silver Trust Fund (NYSE: SLV)
• PowerShares DB Agriculture Fund (NYSE: DBA)
• iPath Dow Jones-UBS Copper Fund (NYSE: JJC)
• iPath Dow Jones-UBS Sugar Fund (NYSE: SGG)