StrikeAndYield crib sheet · information and education only
Commodities
Raw materials as an asset class — energy, metals and agriculture, traded mostly through futures.
The shelf — 10 instruments
Easy 2
| Commodity ETC / ETP | Commodities in a brokerage account: physical metal or futures strips, wrapped as listed securities. |
| Precious Metals Spot | Gold and silver, bought outright — the oldest financial asset, still trading like a currency without a country. |
Medium 3
| Carbon Allowances | A commodity invented by law: the right to emit one tonne of CO2, made scarce on purpose and tradable by design. |
| Commodity Future | Standardised contracts on oil, gold, wheat and power — where the physical world sets its prices. |
| Power Purchase Agreement | A long-dated contract to buy electricity at a fixed price — the instrument that decides whether a wind farm gets built at all. |
Hard 5
| Commodity Option | Optionality on oil, gold and grain — almost always struck on the future, not the physical. |
| Commodity Swap | Fix the price of a flow: months or years of oil, gas or metal, settled in cash against published indices. |
| Electricity Futures | Futures on the one commodity that cannot be stored — where prices go negative at noon and 100× at dinnertime. |
| Freight Derivative | A forward on the cost of moving cargo by sea. The most violent price series in commodities, hedged with a contract on an index nobody can deliver. |
| Weather Derivative | A contract that settles on the temperature, not on any asset. Invented so an energy company could hedge a warm winter — the purest example of a derivative with no underlying you can own. |
What moves prices here
- Inventory — The level of storage, not the flow of production
- The cost and availability of storage — It sets how far into contango the curve can go
- Weather and season — Predictable in shape, unpredictable in size
- Politics and transport — A route matters as much as a reserve
- The dollar — Priced in dollars, so the currency moves the price
- The roll, for anyone holding paper — It can dominate the return entirely
The calendar
| Monthly | First notice and expiry |
| Monthly | Index roll windows |
| Weekly | Inventory reports |
| Seasonal | Injection and withdrawal seasons |
| Harvest and planting | For anything grown |
Which risk decides, across the shelf
| Failure mode |
Decides | Share |
| Market | 10 of 10 | 100% |
| Credit | 1 of 10 | 10% |
| Liquidity | 0 of 10 | 0% |
| Funding | 1 of 10 | 10% |
| Operational | 5 of 10 | 50% |
Counted from the same table each product page prints. Not a
rating and not a ranking: there is deliberately no total.
Information and education only. Every page, figure and
calculator on this site exists to explain how financial instruments work. Nothing here is
investment, tax or legal advice, a recommendation, or a valuation you can rely on.
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