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United Futures Trading Company, Inc. Suite Chicago, IL The act of an option holder in electing not to exercise or offset an option. The policy under which all futures positions owned or controlled by one trader or a group of traders are combined to determine reportable positions and speculative limits.
Any bank, stockyard, mill, storehouse, plant, elevator or other depository that is authorized by an exchange for the delivery of commodities tendered on futures contracts.
The simultaneous purchase and sale of similar commodities in different markets to take advantage of a price discrepancy. The process of resolving disputes between parties by a person or persons arbitrators chosen or agreed to by them. NFA's arbitration program provides a forum physical commodity trading definition resolving futures-related disputes between NFA Members or between Members and customers.
An option whose strike price is equal—or approximately equal—to the current market price of the underlying futures physical commodity trading definition. The difference between the spot or cash price of a commodity and the price of the nearest futures contract for the same or a related commodity.
Basis is usually computed in relation to the futures contract next to expire and may reflect different time periods, product forms, qualities, or locations. A market in which prices are declining.
An expression of willingness to buy a commodity at a given physical commodity trading definition the opposite of Offer. A market in which prices are rising. A member of a futures exchange, usually a clearinghouse member, through which another firm, broker or customer chooses to clear all or some trades.
The actual physical commodity as distinguished from the futures contract based on the physical physical commodity trading definition. Also referred to as Actuals.
A place physical commodity trading definition people buy and sell the actual commodities i. See also Forward Cash Contract and Spot. A method of settling certain futures or options contracts whereby the market participants settle in cash payment of money rather than delivery of the commodity. Stocks of a commodity that have been inspected and found to be of a quality deliverable against futures contracts, stored at the delivery points designated as regular or acceptable for delivery by a physical commodity trading definition exchange.
In grain, called "stocks in deliverable position. The use of graphs and charts in the technical analysis of futures markets to plot price movements, volume, open interest or other statistical indicators of price movement. See also Technical Analysis. Excessive trading that results in the broker deriving a profit from commissions while disregarding physical commodity trading definition best interests of the customers. A system of trading halts and price limits on equities and derivatives markets designed to provide a cooling-off period during large, intraday market declines or rises.
The process by which a clearinghouse maintains records of all trades and settles margin flow on a daily mark-to-market basis for its clearing members. A corporation or separate division of a futures exchange that is responsible for settling trading accounts, collecting and maintaining margin monies, regulating delivery and reporting trade data. The clearinghouse becomes the buyer to each seller and the seller to each buyer and assumes responsibility for protecting buyers and sellers from financial loss by assuring performance on each contract.
A member of an exchange clearinghouse responsible for the financial commitments of its customers. All trades of a non-clearing member must be registered and eventually settled through a clearing member. A range of prices at which physical commodity trading definition transactions took place during the close of the market.
A fee charged by a broker to a customer for executing a transaction. The federal act physical commodity trading definition provides for federal regulation of futures trading. The federal regulatory agency established in that administers the Commodity Exchange Act. An enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures or options contracts.
The concept is similar to a mutual fund in the securities industry. Also referred to as a Pool. An individual or organization which operates or solicits funds for a commodity pool. A person who, for compensation or profit, directly or indirectly advises others as to the advisability of buying or selling futures or commodity options.
A statement sent by a Futures Commission Merchant to a customer when a futures or options position has been initiated. The statement shows the price and the number of contracts bought or sold. Sometimes combined with a Purchase and Sale Statement. A board of trade designated by the CFTC to trade futures or options contracts on a particular commodity.
Commonly used to mean any exchange on which futures are traded. Also referred to as an Exchange. Also referred to as Delivery Month. The tendency for prices of physical commodities and futures to approach one another, usually during the delivery month. A short call or put option position which is covered by the sale or purchase of the underlying futures contract or physical commodity. Hedging a cash commodity using a different but related futures contract when there is no futures contract for the cash commodity being hedged and the cash and futures market follow similar price trends e.
The futures contract which matures and becomes deliverable during the present month. Also called Spot Month. An order that if not executed expires automatically at the end of the physical commodity trading definition session on the day it was entered. A speculator who will normally initiate and offset a position within a single trading session.
The failure to perform on a futures contract as required by exchange rules, such as a failure to meet a margin call or to make or take delivery.
The distant delivery months in which futures trading is taking place, as distinguished from the nearby futures delivery month. The transfer of the cash commodity from the seller of a futures contract to the buyer of a futures contract. Each futures exchange has specific procedures for delivery of a cash commodity. Some futures contracts, such as stock index contracts, are cash settled. A financial instrument, traded on or off physical commodity trading definition exchange, the price of which is directly dependent upon the value of one or more underlying securities, equity indices, debt instruments, commodities, other derivative instruments, or any agreed upon pricing index or arrangement.
Derivatives involve the trading of rights or obligations based on the underlying product but do not directly transfer that product. They are generally used to hedge risk. See also Self-Regulatory Organization. The statement that some CPOs must provide to customers. It describes trading strategy, fees, performance, etc.
An arrangement by which the owner of the account gives written power of attorney to someone else, usually physical commodity trading definition broker or a Commodity Trading Advisor, to buy and sell without prior approval of the account owner. Also referred to as a Managed Account. An order placed electronically without the use of a broker either via the Internet or an electronic trading system. Systems that allow participating exchanges to list their products for trading electronically.
These systems may replace, supplement or run along side of the open outcry trading. The action taken physical commodity trading definition the holder of a call option if he wishes to purchase the underlying futures contract or by the holder of a put option if he wishes to sell the underlying futures contract.
Generally the last date on which an option may physical commodity trading definition exercised. It is not physical commodity trading definition for an option to expire on a physical commodity trading definition date during the month prior to the delivery month for the underlying futures contracts.
The first day on which notice of intent to deliver a commodity in fulfillment of an expiring futures contract can be given to the clearinghouse by a seller and assigned by the clearinghouse to a buyer. Varies from contract to contract. An individual who executes orders on the trading floor of an exchange for any other person. An individual who is a member of an exchange and trades for his own account on the floor of the exchange.
A contract which requires a seller to agree to deliver a specified cash commodity to a buyer sometime in the future, physical commodity trading definition the parties expect delivery to occur. All terms of the contract may be customized, in contrast to futures contracts whose terms are standardized. An account carried by a Futures Commission Merchant in the name of an individual customer; the opposite of an Omnibus Account.
A method of anticipating future price movement using supply and demand information. An individual or organization which solicits or accepts orders to buy or sell futures contracts or commodity options and accepts money or other physical commodity trading definition from customers in connection with such orders. A legally binding agreement to buy or sell a commodity or financial instrument at a later date.
Futures contracts are normally standardized according to the quality, quantity, delivery time and location for each commodity, with price as the only variable. An international electronic trading system for futures and options that allows participating exchanges to list their products for trading after the close of the exchanges' open outcry trading hours. A Guaranteed Introducing Broker is an IB that has a written agreement with a Futures Commission Merchant that obligates the FCM to assume financial and disciplinary responsibility for the performance of the Guaranteed Introducing Broker in connection with futures and physical commodity trading definition customers.
A Guaranteed Introducing Broker is not subject to minimum financial requirements. The practice of offsetting the price risk inherent in any cash market position by taking an opposite position in the futures market. A long hedge involves buying futures contracts to protect against possible increasing prices of commodities. A short hedge involves selling futures contracts to protect against possible declining prices of commodities. The highest price of the day for a particular futures or options on futures contract.
An option that has physical commodity trading definition value. A call option is in-the-money if its strike price is below the current price of the underlying futures contract. A put option is in-the-money if its strike price is physical commodity trading definition the current price of the underlying futures contract.
The amount a futures market participant must deposit into a margin account at the time an order is placed to buy physical commodity trading definition sell a futures contract. A firm or individual that solicits and accepts commodity futures orders from customers but does not accept money, securities or property from the customer.
The last day on which trading may occur in a given futures or option. The ability to control large dollar amounts of a commodity with a physical commodity trading definition small amount of capital. To sell a previously purchased futures or options contract or to buy back a previously sold futures or options position.