'Cost and Freight' paid to a point of destination and included in the price quoted; same as C.A.F.
Cost, insurance, and freight paid to a point of destination and included in the price quoted.
(1) The purchase of one of a given futures contract and simultaneous sale of a different delivery month of the same futures contract; (2) the purchase of a or option and the simultaneous sale of the same type of option with typically the same but a different . Also called a horizontal spread or time spread.
(1) An contract that gives the buyer the right but not the obligation to purchase a commodity or other asset or to enter into a futures position at a specified price on or prior to a specified ; (2) formerly, a period at the and the of some futures markets in which the price for each futures contract was established by auction; or (3) the requirement that a financial instrument such as a bond be returned to the issuer prior to maturity, with principal and accrued interest paid off upon return. See ,
An auction in which the traders place limit bids and offers over a specified time period and those orders are subsequently matched, as opposed to an order book format where standing bid and offer prices are continuously available to all market participants.
Another term for exercised when an option is a . In the case of an option on a physical, the writer of a call must deliver the indicated underlying commodity when the option is exercised or called. In the case of an option on a futures contract, a futures position will be created that will require margin, unless the writer of the call has an offsetting position.
Effecting transactions in an underlying an option shortly before the option's to depress or prevent a rise in the price of the instrument so that previously written call options will expire worthless, thus protecting previously received. See
A trade where one borrows a currency or commoidity commodity or currency with a low and lends a similar instrument with a high cost of carry in order to profit from the differential.
An exchange member firm, usually a , through whom another or customer elects to clear all or part of its trades.
Also called Cost of Carry. Cost of storing a physical commodity or holding a financial instrument over a period of time. These charges include insurance, storage, and interest on the deposited funds, as well as other incidental costs. It is a carrying charge market when there are higher futures prices for each successive contract maturity. If the carrying charge is adequate to reimburse the holder, it is called a 'full charge'. See and
A situation in which the execution of market orders or on an electronic trading system triggers other stop loss orders which may, in turn, trigger still more stop loss orders. This may lead to a very large price move if there are no safety mechanisms to prevent cascading.
The physical or actual commodity as distinguished from the contract, sometimes called or
The market for the cash commodity (as contrasted to a contract) taking the form of: (1) an organized, self-regulated central market (e.g., a commodity ); (2) a decentralized market; or (3) a local organization, such as a grain elevator or meat processor, which provides a market for a small region.
The price in the marketplace for actual cash or spot commodities to be delivered via customary market channels.
A method of settling , and other derivatives whereby the seller (or ) pays the buyer (or ) the cash value of the underlying commodity or a cash amount based on the level of an index or price according to a procedure specified in the contract. Also called . Compare to .
A single order book covering an entire market that accepts . In general, the term is synonymous with .
A time deposit with a specific maturity traditionally evidenced by a certificate. Large denomination CDs are typically negotiable.
Stocks of a commodity that have been inspected and found to be of a quality deliverable against futures contracts, stored at the designated as regular or acceptable for delivery by an exchange. In grain, called stocks in deliverable position. See .
Formerly, a of both the Mid-America Commodity Exchange (MidAm) and another futures exchange who, for a fee, would assume the opposite side of a transaction on MidAm by taking a spread position between MidAm and the other futures exchange that traded an identical, but larger, contract. Through this service, the changer provided liquidity for MidAm and an economical mechanism for between the two markets. MidAm was a subsidiary of the Chicago Board of Trade (CBOT). MidAm was closed by the CBOT in 2003 after MidAm contracts were delisted on MidAm and relisted on the CBOT as . The CBOT continued to use changers for former MidAm contracts traded on an .
The use of graphs and charts in the of futures markets to plot trends of price movements, average movements of price, volume of trading, and .
who reacts to signals derived from graphs of price movements.
Usually refers to the selection of a class of bonds or notes deliverable against an expiring bond or note futures contract. The bond or note that has the highest is considered cheapest to deliver.
An that is transacted in the present, but that at some specified future date is chosen to be either a or a .
Excessive trading of a by a person with control over the account for the purpose of generating commissions while disregarding the interests of the customer.
A system of coordinated trading halts and/or price limits on equity markets and equity derivative markets designed to provide a cooling-off period during large, intraday market declines. The first known use of the term circuit breaker in this context was in the Report of the Presidential Task Force on Market Mechanisms (January 1988), which recommended that circuit breakers be adopted following the market of October 1987.
of the same type (i.e., either or , but not both) covering the same underlying futures contract or other asset (e.g., a March call with a strike price of 62 and a May call with a strike price of 58).
The procedure through which the becomes the buyer to each seller of a futures contract or other derivative, and the seller to each buyer for .
The requirement in the that certain swap transactions be cleared through a unless the transaction is subject to the .
A member of a . All trades of a non-clearing member must be processed and eventually through a clearing member.
An entity through which futures and other derivative transactions are and . It is also charged with assuring the proper conduct of each contract's procedures and the adequate financing of trading. A clearing organization may be a division of a particular , an adjunct or affiliate thereof, or a freestanding entity. Also called a clearing house, multilateral clearing organization, central counterparty, or clearing association. A clearing organization that is registered with the CFTC is known as a . See .
The exchange-designated period at the end of the trading session during which all transactions are considered made at the close. See
The price (or price range) recorded during trading that takes place in the final period of a trading session's activity that is officially designated as the .
Liquidating an existing or or position with an equal and opposite transaction. Also known as
The placement of servers used by market participants in close physical proximity to an matching engine in order to facilitate high-frequency trading.
and held either long or short with different and/or expirations. Types of combinations include and .
An entity involved in the production, processing, or merchandising of a .
Domestic grain in store in public and private elevators at important markets and grain afloat in vessels or barges in lake and seaboard ports.
Short-term promissory notes issued in bearer form by large corporations, with maturities ranging from 5 to 270 days. Since the notes are unsecured, the commercial paper market generally is dominated by large corporations with impeccable .
(1) The charge made by a for buying and selling ; or (2) the fee charged by a futures for the execution of an order. Note: when capitalized, the word Commission usually refers to the .
A weekly report from the providing a breakdown of each Tuesday's for markets in which 20 or more traders hold positions equal to or above the established by the CFTC. Open interest is broken down by aggregate , non-commercial, and non-reportable holdings.
(1) A commodity, as defined in the , includes the agricultural commodities enumerated in Section 1a(9) of the Commodity Exchange Act, 7 USC 1a(9), and all other goods and articles, except onions as provided in Public Law 85-839 (7 USC 13-1), a 1958 law that banned futures trading in onions, and all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in; (2) A physical commodity such as an agricultural product or a natural resource as opposed to a financial instrument such as a currency or interest rate. See
Commodity Credit Corporation
: A government-owned corporation established in 1933 to assist American agriculture. Major operations include price support programs, foreign sales, and export credit programs for agricultural commodities.
The Commodity Exchange Act, 7 USC 1, et seq., provides for the federal regulation of commodity futures and options trading and was enacted in 1936.
A regulatory agency of the U.S. Department of Agriculture established to regulate futures trading under the between 1936 and 1975. The Commodity Exchange Authority was the predecessor of the . Before World War II, this agency was known as the Commodity Exchange Administration. Between 1922 and 1936, the Grain Futures Administration regulated grain futures trading under the Grain Futures Act.
The Commodity Exchange Commission was the successor commission to the Grain Futures Commission, which was created by the Grain Futures Act, enacted on September 21, 1922. The Commodity Exchange Commission, like its predecessor, consisted of the Secretary of Agriculture, Secretary of Commerce, and the Attorney General. The Commodity Exchange Act granted the Commodity Exchange Commission the authority to establish Federal speculative position limits, but not the authority to require exchanges to set their own speculative position limits.
: The Federal regulatory agency established by the Commodity Futures Trading Act of 1974 to administer the .
An index of a specified set of (physical) commodity prices or commodity prices.
An investment fund that enters into or commodity swap positions for the purpose of replicating the return of an index of commodity prices or commodity futures prices.
A swap whose cash flows are intended to replicate a commodity index.
An entity that conducts futures trades on behalf of a or to positions.
An investment trust, syndicate, or similar form of enterprise operated for the purpose of trading commodity or contracts. Typically thought of as an enterprise engaged in the business of investing the collective or “pooled” funds of multiple participants in trading commodity futures or options, where participants share in profits and losses on a pro rata basis. See .
A person engaged in a business similar to an investment trust or a syndicate and who solicits or accepts funds, securities, or property for the purpose of trading commodity contracts or commodity . The commodity pool operator either itself makes trading decisions on behalf of the pool or engages a to do so. Managers at or their advisors are often registered with the CFTC as CPOs or CTAs. See .
A person who, for pay, regularly engages in the business of advising others as to the value of or or the advisability of trading in commodity futures or options, or issues analyses or reports concerning commodity futures or options. Managers at or their advisors are often registered with the CFTC as CPOs or CTAs. See
A bond in which payment to the investor is dependent to a certain extent on the price level of a commodity, such as crude oil, gold, or silver, at .
A statement sent by a to a customer when a futures or options position has been initiated which typically shows the price and the number of contracts bought and sold. See .
(1) A market situation in which attempting to cover their positions are unable to find an adequate supply of contracts provided by willing to liquidate or by new sellers willing to enter the market, except at sharply higher prices (see , ); (2) in , a period of time characterized by repetitious and limited price fluctuations.
A shipment made by a producer or dealer to an agent elsewhere with the understanding that the commodities in question will be cared for or sold at the highest obtainable price. Title to the merchandise shipped on consignment rests with the shipper until the goods are disposed of according to agreement.
Market situation in which prices in succeeding delivery months are progressively higher than in the ; the opposite of contango is .
(1) A term of reference describing a unit of trading for a commodity or or other ; (2) an agreement to buy or sell a specified commodity, detailing the amount and of the product and the date on which the contract will and become deliverable.
Those of a commodity that have been officially approved by an as deliverable in of a futures contract.
The actual amount of a commodity represented in a contract.
An account for which trading is directed by someone other than the owner. Also called a or a .
The tendency for prices of and to approach one another, usually during the delivery month. Also called a 'narrowing of the .'
A position created by selling a option, buying a option, and buying the underlying instrument (for example, a futures contract), where the options have the same and the same . See .
Numbers published by a futures to determine for debt instruments deliverable against bond or note futures contracts. A separate conversion factor is published for each deliverable instrument. Invoice price = Contract Size X Futures Settlement Price X Conversion Factor + Accrued Interest.
A provision of the Commodity Exchange Act with which a registered entity such as a , , , or must comply on an ongoing basis. There are 23 core principles for designated contract markets, 15 core principles for swap execution facilities, 4 core principles for swap data repositories, and 18 core principles for derivatives clearing organizations.
(1) Securing such relative control of a commodity that its price can be , that is, can be controlled by the creator of the corner; or (2) in the extreme situation, obtaining contracts requiring the delivery of more commodities than are available for delivery. See , .
A temporary decline in prices during a that partially reverses the previous rally. See .
Total of various charges incurred when a commodity is and on a futures contract.
In , the method by which a trader takes a position contrary to the current market direction in anticipation of a change in that direction.
The opposite party in a bilateral agreement, contract, or transaction, such as a . In the retail (or Forex) context, the party to which a retail customer sends its funds; lawfully, the party must be one of those listed in Section 2(c)(2)(B)(ii)(I)-(VI) of the .
The risk associated with the financial stability of the party with whom one has entered into contract. impose upon each party the risk that the counterparty will default, but executed on a designated are guaranteed against default by the .
A fixed dollar amount of interest payable per annum, stated as a percentage of principal value, usually payable in semiannual installments.
(1) Purchasing futures to offset a position (same as Short Covering); see ; (2) to have in hand the physical commodity when a short futures sale is made, or to acquire the commodity that might be deliverable on a .
A or position that is covered by the sale or purchase of the underlying futures contract or other underlying instrument. For example, in the case of options on futures contracts, a covered call is a short call position combined with a long futures position. A covered put is a short put position combined with a short futures position.
An developed by John Cox, Stephen Ross, and Mark Rubinstein that can be adopted to include effects not included in the (e.g., early exercise and price supports).
(1) In energy futures, the simultaneous purchase of crude oil futures and the sale of petroleum product futures to establish a refining margin. One can trade a gasoline crack spread, a heating oil crack spread, or a 3-2-1 crack spread which consists of three crude oil futures contracts spread against two gasoline futures contracts and one heating oil futures contract. The 3-2-1 crack spread is designed to approximate the typical ratio of gasoline and heating oil that results from refining a barrel of crude oil. See . (2) Calculation showing the theoretical market value of petroleum products that could be obtained from a barrel of crude after the oil is refined or cracked. This does not necessarily represent the refining margin because a barrel of crude yields varying amounts of petroleum products.
A that makes a payoff in the event the issuer of a specified defaults. Also called .
A bilateral (OTC) contract in which the seller agrees to make a payment to the buyer in the event of a specified in exchange for a fixed payment or series of fixed payments; the most common type of ; also called a credit ; similar to .
A contract designed to assume or shift credit risk, that is, the risk of a such as a default or bankruptcy of a borrower. For example, a lender might use a credit derivative to hedge the risk that a borrower might default or have its downgraded. Common credit derivatives include , , , and .
An event such as a debt default or bankruptcy that will affect the payoff on a , as defined in the derivative agreement.
A rating determined by a rating agency that indicates the agency’s opinion of the likelihood that a borrower such as a corporation or sovereign nation will be able to repay its debt. The rating agencies include Standard & Poor’s, Fitch, and Moody’s.
The difference between the yield on the debt securities of a particular corporate or sovereign borrower (or a class of borrowers with a specified ) and the yield of similar maturity , , or .
An whose payoff is based on the between the debt of a particular borrower and similar maturity , , or .
The time period from one harvest to the next, varying according to the commodity (e.g., July 1 to June 30 for wheat; September 1 to August 31 for soybeans).
In , the price of one currency in terms of another currency in the market of a third country. For example, the exchange rate between Japanese yen and Euros would be considered a cross rate in the U.S. market.
Offsetting or noncompetitive match of the buy order of one customer against the sell order of another, a practice that is permissible only when executed in accordance with the , CFTC rules, and rules of the exchange.
a position in a or contract for a different but price-related commodity.
A procedure for related securities, , and contracts jointly when different clear each side of the position.
In the soybean futures market, the simultaneous purchase of soybean futures and the sale of soybean meal and soybean oil futures to establish a processing margin. See , .
These consist of four identifiers that describe transactions by the type of customer for which a trade is effected. The four codes are: (1) trading by a person who holds trading privileges for his or her own account or an account for which the person has discretion; (2) trading for a ; (3) trading for another person who holds trading privileges who is currently present on the or for an account controlled by such other person; and (4) trading for any other type of customer. Transaction data classified by the above codes is included in the trade register report produced by a .
Trading by telephone or by other means that takes place after the official market has closed and that originally took place in the street on the curb outside the market. Under the and CFTC rules, curb trading is illegal. Also known as .
A that involves the exchange of one currency (e.g., U.S. dollars) for another (e.g., Japanese yen) on a specified schedule.