However…
You don’t have any rice, and also you suppose the value of rice goes to go down. How do you make a revenue from that?
Suppose there’s a pal or a lender who has an present stock of rice (and subsequently presently lengthy). His rice is simply sitting there whereas he waits for the value to go up.
You borrow 1 kg of rice from him, at 0 % curiosity for this instance (since you might be nice associates, you belief one another, and all that) and enter a contract to return 1 kg of rice to them at a future date.
You are taking the borrowed rice and promote it out there on the present market worth of 10 {dollars}. You at the moment are in need of the rice you borrowed, ought to they ask you for it.
When the value of rice goes right down to 9 {dollars}, you purchase again 1 kg of rice on the market worth of 9 {dollars} and return it to your pal or lender. Leaving 1 greenback remaining with you — your revenue.
If the value of rice went as much as 11 {dollars} when you had been in need of it, and the lender requested for it to be returned, you would need to purchase it on the 11 {dollars} worth. The 1 greenback paid out of your pocket is your loss.
