Investors may be able spice up their portfolios on the cheap by trading energy and commodities futures for as little as $10.

HedgeStreet Inc., an online marketplace based in San Mateo, Calif., has been selling simplified versions of future contracts and options for $50 and under since early 2005.

A futures contact is an obligation to buy a commodity at a set price on a future date. These securities are also called derivatives because their value derives from the underlying commodity.

Futures have typically been traded by companies, financial institutions and rich investors to hedge risks or reap gains from fluctuations in commodity prices. Today, investors can trade more-exotic futures contracts based on interest rates, stock-market indexes and even the weather.

Blocks of future contacts are generally bought on commodities exchanges for hundreds of thousands of dollars, making them unavailable to the vast majority of retail investors. But thanks to HedgeStreet, that's starting to change.

"We're trying to democratize derivatives trading by opening it up to the very small retail investor," says Russell Andersson, vice president and co-founder off HedgeStreet. "Many people read in the papers that oil went up, but they have no way of profiting from that."

At HedgeStreet, all transactions are settled in cash, meaning that investors do not actually deal in the underlying commodity.

For example, investors who expect oil to fall in price can sell a futures contact. They will earn one dollar for every dollar per barrel that oil falls. Likewise, they will lose one dollar for every dollar that a barrel of oil rises in price.

HedgeStreet reduces traditional risks of dealing in futures and options by limiting trades to what investors have deposited in their accounts. The minimum deposit for initiating trades is $100.

HedgeStreet is subject to the oversight of the Commodity Futures Trading Commission.

The company handled nearly 1 million transactions in its first year. More than one-third involved crude oil, natural gas or gasoline. Traders also exchanged about a quarter of a million contracts for gold and silver, and a nearly equal amount for currencies.

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