How Does Risk Affect My Futures And Options Returns?
Your returns may change radically at any time because futures and options are subject, by nature, to abrupt changes in price.
Commodity prices are volatile because they respond to many unpredictable factors: weather, labor strikes, inflation, foreign exchange rates, government monetary policies, etc.
And, in an individual account, because your position in futures and options is leveraged, even a small move against your position may result in a large loss, including the loss of your entire initial margin payment and liability for additional losses.
The same risk of loss applies to a commodity pool, but your loss may be limited to the amount of your investment.
