It’s no mystery that commodity prices have ballooned to levels that we’ve either never seen before, or at the very least haven’t seen in decades. The real mystery is whether we’re in the midst of a commodity bubble driven by speculation, or if the rising prices are simply the result of scarce supply and exploding demand from emerging markets. This mystery has fueled heated debates between commodity producers and investors and now that the US Government along with Commodity Futures Trading Commission (CFTC) have become involved, things could get interesting.

Options, futures, forwards, swaps, derivatives... what do any of these terms mean? For anyone that has some experience in the investing world, whether that experience is personal investing or simply reading the news paper, these terms probably look familiar to you. But do you really know what they mean or how they’re used? If you’re like the majority of investors, then the answer is most likely no. But fear not my fellow investors… over the next undetermined amount of time I will be writing an undetermined number of articles where I’ll attempt to explain each of these terms and how they are used in capital markets.