You can agree to buy Cu now for £3k. You will then be the owner of an amount of Cu that currently is trading for £3k. Somebody else thinks that in 3 months time, that Cu will be worth less than £2.8k, so he's offering it for that price then, but you make the contract now. If you think it's going to be worth more than £2.8k, it's a good deal for you. If you don't, then you're agreeing with him, so you won't want to tie yourself into buying the Cu in 3 months time at £2.8k.

However, if you can find a mug who believes that it's going to be worth more than £3k, you can buy it yourself now at £2.8k and then sell it to him immediately (now) for £3k. He thinks he's getting a good deal, cos he believes the price is going to be over £3k, and you're guaranteed some dosh because effectively you're taking a cut of a transaction between the guy who sold it to you and the guy who's buying it from you.

If it ends up worth less than £2.8k, then it's the end buyer who loses out. If it ends up worth more, then you don't make as much as you would have done if you'd held onto it, but either way you make money.

So effectively, these big chains build up until either somebody doesn't want to hedge their bets any more or they can't find a buyer at the price it would take to make it worth their while to sell.

Does that make sense?

zaza