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The exercise entails buying future contracts, meaning the investor is agreeing to buy something that the seller has not yet made for a set agreed price. However this type of transition does not in any way mean, that the investor will eventually be responsible for or expect to receive the inventories in its physical form.
This is a platform for future contracts, where hedge risks or speculations are done rather than the actual exchange of physical material. These transactions are used not only as financial instruments for producers and consumers but also by speculators intending to make a quick and easy profit without having to deal with any tangible physical products.
