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Platinum Futures

A platinum futures contract is a contract to buy or sell a specific weight of platinum at a designated time in future, at an agreed price defined at the time the contract is entered. 

Platinum futures contracts were originally designed to protect large industrial users of the precious metal from adverse price swings by enabling them to obtain or supply a steady quantity of platinum at established prices in order that their respective businesses will be able to make a profit. 

Members of the public buying platinum futures are usually speculators betting on the near term direction of the price of platinum. They will buy platinum futures when they believe that the price of the metal will rise and sell them when they think it will fall. Platinum futures traders don't actually have to own or take delivery of the physical metal. They can just pay (or receive) the valuation difference in cash on delivery date by selecting the cash settlement option upon entering the trade. 

As futures trading account typically provide significant leverage, the associated profit potential as well as the risk involved can be very high. As an example, purchasing platinum futures allow the investor to control $1000 worth of platinum by merely paying only $100 upfront, with the remaining $900 supplied by the brokerage in the form of a short term loan.

Investors are advised to exercise due caution if they wish to venture into this highly speculative way of playing the platinum market. The risk of trading platinum futures is very high, especially for those who are uninitiated in the intriques of options and futures trading. Less aggressive platinum investors are advised to stick to buying platinum ETFs or the stocks of platinum producers.