The New York Mercantile Exchange (NYMEX) is a market exchange where precious metals and energy FUTURES and OPTIONS contracts are bought and sold. Created in 1872 as the New York Butter and Cheese Exchange, it was renamed the New York Mercantile Exchange in 1882, and in 1994 it merged with COMEX (Commodity Exchange Inc.) to become the largest physical commodity futures exchange. Today NYMEX is used primarily by managers and broker/ dealers to reduce RISK in business transactions. Traditionally merchants and other industry members used futures CONTRACTs—agreements to buy or sell a specific amount of a commodity at a particular price on or before stipulated date—to hedge their risks. Producers sell futures contracts for commodities they produce, thereby assuring themselves of a price for their products. If, in the time between when they sell the futures contract and when their products are ready for market, the commodity price goes down, producers will be able to buy back their futures contract at a lower price. They PROFIT by the difference, offsetting the lower market price for their product. If the price goes up, they will lose money on the futures contract but profit from the higher price in the marketplace. As distribution systems for agricultural products changed in the 1930s and 1940s, NYMEX and many other commodity exchanges declined in importance. The exchange moved away from trading in agricultural commodities and added futures markets for gold, silver, and platinum as well as energy-related products including crude oil, heating oil, gasoline, and natural gas. With the rapid changes in energy prices during 2000–01, companies often used futures contracts or options on futures contracts to reduce their risk of higher energy COSTS. Where futures contracts obligate the buyer and seller to a specified agreement, options contracts give the buyer or seller the right to buy or sell at a specified price. If the option is not exercised by the maturity date, it expires with the buyer losing the amount of money paid for the option. Prices of futures and options can be quite volatile. In addition to the reduction of risk, speculators add liquidity to commodity and futures markets and profit when they correctly anticipate price changes in the market. The NYMEX is regulated by the COMMODITY FUTURES TRADING COMMISSION (CFTC), created to oversee commodity exchanges. In the last two decades, NYMEX, the CHICAGO BOARD OF TRADE, CHICAGO MERCANTILE EXCHANGE, and other smaller regional exchanges have competed to provide new options and futures contracts to meet the needs of financial markets and managers.