Index Futures vs. Commodities Futures Contracts
Feature |
Index Futures |
Commodities Futures |
---|---|---|
Underlying Asset |
Stock market indices (e.g., S&P 500, NASDAQ) |
Physical commodities (e.g., gold, oil) |
Purpose |
Investment, speculation, and risk management |
Price discovery, hedging against commodity price fluctuations |
Market Influence |
Reflects overall market sentiment and economic conditions |
Influenced by supply and demand dynamics, geopolitical events |
Settlement |
Cash settlement or physical delivery |
Often cash settlement; physical delivery in some cases |
Contract Sizes |
Standardized based on the index points |
Varies based on the commodity, measured in quantity or weight |
Volatility |
Subject to market sentiment and economic indicators |
Affected by weather conditions, geopolitical factors, and supply disruptions |