Simple English definitions for legal terms
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A London commodity option is a type of agreement where someone agrees to buy or sell a futures contract for a commodity that is traded on the London markets. This agreement is made for a specific price and within a specific time frame. Essentially, it's a way for people to make a deal about buying or selling a certain commodity in the future, based on what they think the price will be.
A London commodity option is a contract that allows the buyer to purchase or sell a futures contract for a commodity that is traded on the London markets. This contract is agreed upon for a specific price and within a particular time frame.
Let's say that a farmer wants to sell his wheat crop, but he is worried that the price of wheat will go down before he can sell it. He could enter into a London commodity option contract with a buyer, which would allow him to sell his wheat at a specific price, even if the market price drops. This would protect him from any potential losses.
On the other hand, a baker might want to buy wheat for his bakery, but he is worried that the price of wheat will go up before he can purchase it. He could enter into a London commodity option contract with a seller, which would allow him to buy the wheat at a specific price, even if the market price goes up. This would protect him from any potential price increases.
These examples illustrate how a London commodity option can be used to manage risk and protect against potential losses or price increases.