Do I have to pay the full value of the contract to enter into a futures or option on a futures contract?
No. When you enter into a futures or option contract through an individual account, you typically only make a partial payment, referred to as a "margin payment" or "performance bond." The percentage of this payment you must make will vary depending on the particular commodities contract and the commodities exchange, but is generally very small relative to the value of your market position.
While this provides you with the ability to "leverage" your funds, there are also major risks. Because trading commodity futures and option contracts is heavily leveraged, very small changes in price, which occur frequently, can result in large gains or losses in a very short period of time, and wipe you out completely, not just the amount you "invested".
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