Matt Levine’s Money Stuff: Fine, Trade Labubu Futures

Sneaker derivatives

Farmers grow wheat and sell it to millers who use it to make flour. Sometimes a farmer wants to lock in a price for her wheat before the harvest, so she will sell wheat futures on a commodity futures exchange. Wheat futures are derivative contracts on wheat, and you don’t have to be a farmer to trade them. Anyone who wants to bet on the future price of wheat can trade wheat futures. If the futures trade at $5.50 per bushel, you can buy wheat at $5.50 today, and later you can sell it back at whatever the price ...