Question

Difference between commodity derivative and financial derivative

Answer 1

Explanation:

The basic concept of a derivative contract remains the same whether the underlying happens to be a commodity or a financial asset. However, there are some features which are very peculiar to commodity derivative markets.

Answer 2

Explanation:

- NIFM In the case of financial derivatives, most of these contracts are cash settled. ... On the other hand, due to the bulky nature and physically existence of the underlying assets, physical settlement in commodity derivatives creates the need for warehousing.