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Commodities

Total Return

January-March 2023

3,456

+25% per week

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Commodities
Option Contracts

Harnessing Opportunity While Managing Risk

At Wellington Legacy Capital, we specialize in navigating the complexities of the global commodities markets through sophisticated investment instruments such as commodities option contracts. These contracts provide our clients with the ability to gain exposure to the price movements of key assets like gold, oil, natural gas, agricultural products, and industrial metals—with a strategic edge.

Commodity options are financial derivatives that give investors the right, but not the obligation, to buy or sell a specific quantity of a commodity at a predetermined price before or on a set expiration date. They are powerful tools for hedging, diversification, and speculation in the commodities market.

What Are Commodities Option Contracts?

A commodity option contract is a financial derivative that grants the investor the right, but not the obligation, to buy or sell a specific quantity of a commodity at a predetermined price (strike price) before or at a set expiration date.

There are two primary types:

• Call Options: Give the holder the right to buy a commodity at a specific price.
• Put Options: Give the holder the right to sell a commodity at a specific price.
These instruments are used both for speculation—to profit from anticipated price movements—and for hedging, to manage and mitigate exposure to adverse price fluctuations.

Why Trade Commodity Options?

Defined Risk Exposure

Options allow investors to participate in market movements with limited upfront risk—only the premium paid.

Strategic Flexibility

Whether bullish, bearish, or neutral on a commodity, options offer tailored strategies that align with your market view and risk tolerance.

Portfolio Diversification

Commodities behave differently from stocks or bonds, providing valuable diversification and inflation protection in volatile markets.

Risk Management & Hedging

Producers, consumers, and investors use options to hedge against adverse price movements in critical inputs or outputs.

How We Use Options at Wellington Legacy:

Gold Options: Used to gain upside exposure to gold prices during times of monetary uncertainty or inflation without taking on the full cost of physical ownership or futures positions.
• Crude Oil Options: Employed to capitalize on energy price volatility or to hedge fuel exposure in industrial and transportation sectors.
• Agricultural Options: Allow hedging against weather-related risks in grain markets or to speculate on seasonal supply shifts.

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