Stock market options glossary pdf

Market Regulation Advisory Notices View All MRANs. News View All News. Jobs View All Jobs. Open Markets Visit Open Markets. We have compiled this glossary from a number of sources to help you understand commonly used terms in the futures industry and our markets.

The net worth of a commodity account as determined by combining the ledger balance with any unrealized gain or loss in open positions as marked to the market. In the metals markets, the nearest base contract month that is not the current delivery month.

The base months for each metals futures are defined by each individual contract. For other contracts this may designate the closest month to expiration or the expiration month that has the most trading volume. An actual physical commodity someone is buying or selling, e. The cash-price equivalent reflected in the current futures price.

This is calculated by taking the futures price times the conversion factor for the particular financial instrument e. A transaction generally used by two hedgers who want to exchange futures for cash positions. Also referred to as "Exchange for Physicals" EFP or "versus cash".

CME's electronic give-up system. ACS allows executing firms to give-up allocate trades at the execution price to the designated carrying firms sutilizing their current trade entry systems and CME's Trade Management System. ACS may be utilized for trades executed and given up to a single firm, as well as trades given up to multiple firms see Give-up System. A provision of a futures contract that allows buyers and sellers to make and take delivery under terms or conditions that differ from those prescribed in the contract.

An ADP may occur at any time during the delivery period, once long and short futures positions have been matched for the purpose of delivery.

Major natural gas industry trade association, based in Alexandria, Virginia. AGA conducts technical research and helps create standards for equipment and products involved in every facet of the natural gas industry. It also compiles statistics which are considered industry standards.

API conducts research and sets technical standards for industry equipment and products from wellhead to retail outlet. It also compiles statistics which are regarded as industry benchmarks. Grade and quality specifications for petroleum products and metals are determined by the ASTM in test methods.

Type of option contract that can be exercised at the buyer's discretion on any trading day up to and including the expiration date. This differs from a European style option, which may only be exercised on its expiration date. An order type, if the order can execute in total, then it executes.

Otherwise it stays in the order book until it can execute in total. The scale created by the American Petroleum Institute to indicate the 'lightness' or 'heaviness' of crude oils and other liquid hydrocarbons. Calibrated in API degrees or degrees APIit is used to expresses the relative density of oil. The scale is an inverse measure— the lighter the crude the higher the API gravity, and vice versa.

The higher the API degree, the higher the market value of the hydrocarbon being measured. The specific method prescribed by a computer operating system or by an application program by which a programmer writing an application program can communicate with the operating system or another application.

Application service provider ASP ; a company that offers individuals and firms access via the Internet to applications and related services that would otherwise have to be located in their personal computers.

Armored carriers approved by the Exchange for the transportation of gold, platinum, and palladium. Any bank, depository, stockyard, mill, warehouse, plant or elevator authorized by the Exchange for delivery of Exchange contracts. Any warehouse which has been officially approved by the exchange and from which actual deliveries of commodities may be made on futures contracts. The simultaneous purchase of cash, futures, or options in one market against the sale of cash, futures or options in a different market in order to profit from a price disparity.

Also called the "offer. An unmatched trade from a previous day that is resubmitted to the CME clearing system; trade is submitted "as of" the original trade date. The process by which the CME clearing house, in response to a long exercising its option, randomly selects a seller to fulfill its obligation to buy or sell the underlying futures contract at its strike price.

The assigned seller of a put must buy the underlying futures contract; the assigned seller of a call must sell the underlying futures contract. The process by which the CME clearing house selects the long position to accept delivery on a contract for which a seller has submitted a delivery notice.

A person, commonly called a commodity broker, associated with and soliciting customers and orders for a futures commission merchant or introducing broker. The AP must pass a Series 3 examination, be licensed by the Commodity Futures Trading Commission and be a member of the National Futures Association. Automated trading system ATS ; a trading method in which a computer makes decisions and enters orders without a person entering those orders.

This is a programmatic way of representing the trader. Please refer to individual contract specifications for Automatic Exercise guidelines. Volume for a specified time period divided by the number of business days within that same time period.

CME Rule enables clearing firms, in defined circumstances, to confirm average prices when multiple prices are received on the execution of an order or a series of orders "series averaging" during a single trading session.

The APS is the vehicle through which the exchange computes an average price. Firms then allocate such trades at the average price to the carrying firm s or may sub-allocate those trades to customer accounts on their books.

The number of open positions in the contract at the close of trading on the selected trading day. Also called deferred or distant months. Selling one or more at-the-money options and buying a larger number of out-of-the-money options. Also known as an inverted market. The opposite of contango. A graph of prices, volume and open interest for a specified time period used by the chartist to forecast market trends. For example, a daily bar chart plots each trading session's open, high, low and settlement prices.

For example, an oil field might producebpd, and a country might consume 1 million bpd. The minimum amount of electric power delivered or required over a given period of time at a steady rate. Baseload values typically vary from hour to hour in most commercial and industrial areas. Copper, aluminum, lead, nickel, and tin.

These metals are defined as base because they oxidize or corrode relatively easily. The difference between the spot or cash price and the futures price of the same or a related commodity. Basis is usually computed to the near future, and may represent different time periods, product forms, qualities and locations. The local cash market price minus the price of the nearby futures contract is equal to the basis. The uncertainty as to whether the cash-futures spread will widen or narrow between the time a hedge position is implemented and liquidated.

A vertical spread involving the sale of the lower strike call and the purchase of the higher strike call, called a bear call spread. Also, a vertical spread involving the sale of the lower strike put and the purchase of the higher strike put, called a bear put spread. In most commodities and financial instruments, the term refers to selling the nearby contract month, and buying the deferred contract, to profit from a change in the price relationship.

A measure of an asset's return in relation to an underlying factor or index; e. An offer to buy a specific quantity of a commodity at a stated price or the price that the market participants are willing to pay. A privately negotiated futures or option on futures transaction that is executed apart from the public auction market and that is permitted in designated contracts subject to specified conditions. An extraordinarily high volume trading session occurring suddenly in an uptrend, possibly signaling the end of the trend.

The Board of Directors of the exchange, or any other body acting in lieu of and with the authority of the Board. A chart pattern described by gap in prices that may signal the end of a price pattern and the beginning of an important market move. The point at which an option buyer or seller experiences no loss and no profit on an option. Call breakeven equals the strike price plus the premium; put breakeven equals the strike price minus the premium. An agreement that established fixed-rate trading bands for the world's major foreign currencies.

The agreement also provided for central bank currency market intervention and tied the price of the U. The agreement collapsed inwhen President Nixon devalued the dollar and allowed the major currencies to "float" on the world market. The amount of heat required to increase the temperature of a pound of water 1o Fahrenheit. A Btu is used as a common measure of heating value for different fuels. Prices of different fuels and their units of measure dollars per barrel of crude, dollars per ton of coal, cents per gallon of gasoline, cents per thousand cubic feet of natural gas can be easily compared when expressed as dollars and cents per million Btus.

A futures contract based upon an index that is not considered narrow-based as defined in Section 1a 25 of the Commodity Exchange Act. A vertical spread involving the purchase of the lower strike call and the sale of the higher strike call, called a bull call spread.

Also, a vertical spread involving the purchase of the lower strike put and the sale of the higher strike put, called a bull put spread. In most commodities and financial instruments, the term refers to buying the nearby month, and selling the deferred month, to profit from the change in the price relationship. The simultaneous sale or purchase of one each of a series of consecutive futures contracts.

Bundles provide a readily available, widely accepted method for executing multiple futures contracts with a single transaction. A three-legged option spread in which each leg has the same expiration date but different strike prices. The placing of two inter-delivery spreads in opposite directions with the center delivery month common to both spreads.

A condition of the market in which there is an abundance of goods available and hence buyers can afford to be selective and may be able to buy at less than the price that previously prevailed. Also referred to as a spread order. A trade to close out a deep out-of-the-money option contract position at price less than the minimum trading tick. Variable cabinet prices are eligible for trading on the floor; a fixed cabinet price of one-half the minimum trading tick is eligible to trade on CME Globex.

Also called a intra-commodity spread. The simultaneous purchase and sale of the same futures contract, but different contract months. The simultaneous purchase and sale of options on futures contracts of the same strike price, but different expiration dates. A contract between a buyer and seller in which the buyer pays a premium and acquires the right, but not the obligation, to purchase a specified futures contract at the strike price on or prior to expiration. The seller receives a premium and is obligated to deliver, or sell, the futures contract at the specified strike price should a buyer elect to exercise the option.

Also see American Style Option and European Style Option. A supply contract between a buyer and a seller, whereby the buyer is assured that he will not have to pay more than a given maximum price.

This type of contract is analogous to a call option. In reference to electricity, the maximum load that a generating unit or generating station can carry under specified conditions for a given period of time without exceeding approval limits of temperature and stress.

A contract or unit of trading. Originally, one contract, or "car," was the quantity of a commodity that would fill a railroad car. For physical commodities such as grains and metals, the cost of storage space, insurance, and finance charges incurred by holding a physical commodity. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost of funds necessary to buy the instrument. Also referred to as cost of carry.

The actual physical commodity or financial instrument as distinguished from the futures contract that is based on the physical commodity or financial instrument. A place where people buy and sell the actual commodities, i. Spot usually refers to a cash market price for a physical commodity that is available for immediate delivery. A forward contract is a cash contract in which a seller agrees to deliver a specific cash commodity to a buyer sometime in the future.

Forward contracts, in contrast to futures contracts, are privately negotiated and are not standardized. The sale of commodities in local cash markets such as elevators, terminals, packing houses and auction markets. A settlement method used in certain future and option contracts where, upon expiration or exercise, the buyer does not receive the underlying commodity but the associated cash position.

For buyers not wishing to take actual possession of the underlying physical commodity, cash settlement is sometimes a more convenient method of transacting business.

A flat rectangular piece of metal which has been refined by electrolysis. Copper is commonly traded and delivered in this form. A government bank that regulates a country's banks and manages a nation's monetary policy. The Federal Reserve is the central bank in the United States, whereas the European Central Bank ECB is the central bank of the European Monetary Union.

A measure of the ignitability of diesel fuel. Diesel fuel generally has to meet a cetane number specification of As a measure of performance, the cetane number serves a similar purpose to the octane number of gasoline. Commodity Futures Trading Commission as created by the Commodity Futures Trading Commission Act of The Chairman of the Board of Directors, or one acting in lieu of and with the authority of the Chairman of the Board. On July 9,Chicago Mercantile Exchange Holdings Inc.

The Chief Executive Officer of the Exchange or one duly authorized to act in lieu of and with the authority of the Chief Executive Officer. Generally refers to the location at which gas changes ownership or transportation responsibility from a pipeline to a local distribution company or gas utility.

A share of Class A Common Stock of CME Group Inc. Class A Shares shall confer no trading rights. A utility's sales categories such as residential, commercial, industrial, other, and sales for resale. Refined products such as kerosene, gasoline, home heating oil, and jet fuel carried by tankers, barges, and tank cars.

All refined products except bunker fuels, residual fuel oil, asphalt, and coke. The procedure through which CME Clearing House becomes the buyer to each seller of a futures contract, and the seller to each buyer, and assumes responsibility for protecting buyers and sellers from financial loss by ensuring buyer and seller performance on each contract. This is effected through the clearing process, in which transactions are matched, confirming that both the buyer's and the seller's trade information are in agreement.

A fee charged by the exchange for each contract cleared. There are also clearing fees associated with deliveries, creation of a futures position resulting from an option exercise or assignment, Exchange for Physicals EFPblock trades, transfer trades and adjustments.

A firm approved to clear trades through CME Clearing House. Memberships in clearing organizations are usually held by companies. Clearing members are responsible for the financial commitments of customers that clear through their firm.

A firm meeting the requirements of, and approved for, clearing membership at the Exchange. The term "clearing member" as used in the Rules shall include all clearing member categories set forth in Ruleunless otherwise specified. Composed of transfers, exchange-for-physicals EFPsblocks and give-ups. Transfers, blocks and EFPs are privately negotiated, ex-pit transactions, while give-ups relate to post-trade processing.

Each matched trade between a buyer and a seller generates two clearing trade transactions: ClearPort is CME Group's clearing service for Over-The-Counter markets. PNT is an acronym for Privately Negotiated Trades, which may be reported through ClearPort or directly into CME Clearing. The number in this column represents the total number of Ex-Pit transactions, or transactions that were completed outside of Globex or Open Outcry trading venues.

A member's bona fide employee who has been registered by the exchange to work on the trading floor. The period at the end of the trading session officially designated by the exchange during which all transactions are considered "made at the close.

The high and low prices, inclusive of bids and offers, recorded during the time period designated by the Exchange as the close of pit trading in a particular contract.

The division of CME Group that confirms, clears and settles all CME Group trades. CME Clearing also collects and maintains performance bond funds, regulates delivery and reports trading data. A flexible clearing service open to all OTC market participants, that eliminates third-party credit risk and provides capital efficiencies across a wide range of asset classes.

CME ClearPort is not an execution platform or mandate or a set of products. It is no longer limited to energy clearing services as in the past nor is it limited to clearing services where OTC positions are substituted into futures. The Chicago Mercantile Exchange Division of the exchange.

Holders of the membership interest associated with Chicago Mercantile Exchange Holdings Inc. Class B-1 Stock, who have been elected to membership, are members of the CME Division.

The first global electronic trading system for futures and options has evolved to become the world's premier marketplace for derivatives trading. With continual enhancements, the platform has effectively enabled CME, already known for innovation, to transform itself into a leading high-tech, global financial derivatives exchange.

CME Globex allows orders to be placed for various different durations. An order entered into the CME Globex system that does not contain an order duration qualifier will be canceled if it is not filled during the trading day in which it was received or, if it was received between trading days, during the next trading day.

Current order durations qualifiers are: The CME Globex platform supports a broad array of order functionality, offering convenience and flexibility to meet a variety of individual trading needs. The availability of specific order types varies based on the markets, products and trading applications. A combined entity formed by the merger of the Chicago Mercantile Exchange CME and the Chicago Board of Trade CBOT. We provide the widest range of benchmark futures and options products available on any exchange, covering all major asset classes.

CME Group or CME Group Inc. A generating facility that produces electricity and another form of useful thermal energy such as heat or steamused for industrial, commercial, heating, or cooling purposes.

A supply contract between a buyer and seller of a commodity, whereby the buyer is assured that he will not have to pay more than some maximum price, and whereby the seller is assured of receiving some minimum price.

This is analogous to an options fence or collar, also known as a range forward. The one time fee charged by a broker to a customer when the customer executes a futures or option on futures trade through the brokerage firm. Any product approved and designated by the Board for trading or clearing pursuant to the rules of the Exchange.

A unique symbol used to identify a particular commodity traded on CME for purposes of submitting data into the Clearing System. This code should not be confused with the ticker symbol, which is the code denoting which commodity price is being quoted. A Government-owned and operated entity that was created to stabilize, support, and protect farm income and prices.

CCC also helps maintain balanced and adequate supplies of agricultural commodities and aids in their orderly distribution. An exchange that lists designated futures contracts for the trading of various types of derivative products and allows use of its facilities by traders. Must comply with rules set forth by the Commodity Futures Trading Commission CFTC.

Acronym for the Commodity Futures Trading Commission as created by the Commodity Futures Trading Commission Act of This government agency regulates the nation's commodity futures industry. An enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts or commodity options. A person who, for compensation or profit, directly or indirectly advises others as to the value or the advisability of buying or selling futures contracts or commodity options.

Advising indirectly includes exercising trading authority over a customer's account as well as providing recommendations through written publications or other media. Currency that is eliminated when calculating a cross rate between two currencies when their exchange rates are expressed in terms of the common currency; normally the US dollar. A measuring the average price of consumer goods and services purchased by U. It is one of several price indices calculated by national statistical agencies.

The percent change in the CPI is a measure of inflation. The CPI can be used to index i. A market situation in which prices are higher in the succeeding delivery months than in the nearest delivery month. Depending on the context in which it is used, a term of reference describing either a unit of trading in a particular futures, options or cleared product or a product approved and designated by the Board for trading or clearing pursuant to the rules of the Exchange.

The standard grades of commodities or instruments listed in the rules of the exchanges that must be met when delivering cash commodities against futures contracts. Grades are often accompanied by a schedule of discounts and premiums allowable for delivery of commodities of lesser or greater quality than the standard called for by the exchange. The month and year in which a given contract is delivered in accordance with the Rules for physically delivered contracts or the month and year in which a given contract is finally settled in accordance with the Rules for cash settled contracts.

The actual amount of a commodity represented in a futures or options contract as specified in the contract specifications. A large geographic area within which a utility or group of utilities regulates electric power generation in order to maintain scheduled interchanges of power with other control areas and to maintain the required system frequency.

An electric entity that operates generating capacity to meet area demand, monitors actual interchange electric energy flowing between control areasand can dispatch generating resources to ensure that actual interchange equals scheduled interchange. Any account for which trading is directed by someone other than the owner. Also called a Managed Account or a Discretionary Account.

A term referring to cash and futures prices tending to come together i. A delta-neutral arbitrage transaction involving a long futures contract, a long put option, and a short call option. The put and call options have the same strike price and same expiration date. A day in which the average daily temperature is more than 65 degrees Fahrenheit, and therefore likely to be a day in which people turn on their air conditioning. A Cooling Degree Day is assigned a value that represents the number of degrees that day's average temperature exceeds 65 degrees.

For example, if a day's average temperature is 85 degrees, the CDD value for that day would be 20 85 - If the average temperature is less than or equal to 65 degrees, the CDD value for the day would be zero.

The day would not be sufficiently warm enough to require air conditioning. A group organized under law into a utility company that will generate, transmit, or distribute supplies of electric energy to a specified area not being serviced by another utility. Typically, a co-op is a not- for-profit organization. Short-term transactions undertaken primarily to maintain the integrity of an electricity distribution system. Term refers to a sale in which the buyer agrees to pay a unit price that includes the free on board FOB value at the port of origin plus all costs of insurance and transportation.

This type of transaction differs from a "delivered" agreement in that it is generally ex-duty, and the buyer accepts the quantity and quality at the loading port rather than paying for quality and quantity as determined at the unloading port. Risk and title are transferred from the seller to the buyer at the loading port, although the seller is obliged to provide insurance in a transferable policy at the time of loading.

Also referred to as carrying charge. Risk associated with an FX foreign exchange transaction, referring to potential political or economic instability. The interest rate on a debt instrument expressed in terms of a percent on an annualized basis that the issuer guarantees to pay the holder until maturity. A specific spread trade involving simultaneously buying and selling contracts in crude oil and one or more derivative products, typically gasoline and heating oil.

The simultaneous purchase or sale of crude oil against the sale or purchase of refined petroleum products. These spread differentials which represent refining margins are normally quoted in dollars per barrel by converting the product prices into dollars per barrel multiply the cents-per-gallon price by 42 and subtracting the crude oil price.

A contract between two parties specifying a payment in the event of a default of the underlying debt issue. Typically these two party agreements buyer and seller are created and traded in an unregulated Over-The-Counter or OTC environment. These are derivative contracts in that the pricing of a CDS is tied to the current market perception of the credit worthiness of the debt issuer. A CDS can be constructed on the debt issues of almost any corporation, municipality, bank, government and government agency that are rated for credit worthiness.

A CDS buyer pays a premium to the seller and would receive payment from the seller if the underlying credit issue defaults or there is a change in the rating status per the terms of the individual CDS. If there is no default or rating change in the underlying debt, the seller keeps the premium.

A credit default swap CDS is the most highly utilized type of credit derivative. Most debt holders want to keep the loan in place so they can continue to receive the regular interest and principal payments; but since bond holders are typically very risk averse investors, they are willing to pay a premium to be sure they continue to get paid even if the borrower has a hard time making the payments.

CDS contracts are perfect for this, since they are designed to transfer a given risk from one party to another without transferring the underlying bond or other credit asset. It is important to note, however, that a CDS is not insurance. Since a CDS is not insurance, sellers of CDS's are not subject to the reserve requirements nor the government regulations required by insurance companies to ensure there is enough money to pay off in the case of default.

A credit derivative is a contractual agreement designed to shift credit risk between parties. Originally used primarily by banks to hedge and diversify the credit risk of their customers in the event they could not pay back their loans. In most basic terms, a credit default swap is similar to an insurance contract, providing the buyer, usually a debt holder, with protection against the borrower not repaying the debt.

The time span from harvest to harvest for agricultural commodities. The crop marketing year varies slightly with each ag commodity, but it tends to begin at harvest and end before the next year's harvest, e. The futures contract month of November represents the first major new-crop marketing month, and the contract month of July represents the last major old-crop marketing month for soybeans.

Reports compiled by the U. Department of Agriculture on various ag commodities that are released throughout the year. Information in the reports includes estimates on planted acreage, yield, and expected production, as well as comparisons to production from previous years. 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 markets follow similar price trends e.

The process of allowing for a reduction in performance bond margin requirements. This reduction is possible because risk is reduced when offsetting positions are cleared by the same or affiliated clearing members. The exchange rate between two currencies, in which the home country's currency is not included.

Matching of the buying order of one customer against the selling order of another, a practice that is permissible only when executed as required by CME RuleCFTC Regulations and CME Rulebook. Offsetting match or trade by a broker of the buy order of one customer against the sell order of another, or a match of a trade made by a broker with his customer, a practice that is permissible only when executed in accordance with the Commodity Exchange Act, Commodity Futures Trading Commission regulations, and rules of the contract market.

Neither NYMEX Division nor COMEX Division members are permitted to take the opposite side of a customer's order, except, under certain circumstances, for trades involving long-dated nine months or more forward COMEX Division copper futures. Please consult CME Group rule books for additional information. A mixture of hydrocarbons that exists as a liquid in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities.

Crude is the raw material which is refined into gasoline, heating oil, jet fuel, propane, petrochemicals, and other products. 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.

The most common measure of gas volume, referring to the amount of gas needed to fill a volume of one cubic foot at One cubic foot of natural gas contains, on average, 1, Btus. The sum of the daily Heating Degree Day HDD or Cooling Degree Day CDD values over a specified period, usually a month or a season.

This value would also be the number recorded in that month's or season's HDD or CDD Index value. The futures contract which matures and becomes deliverable during the present month or the month closest to delivery.

Also called the spot month. A term used frequently in bond transactions. Current yield is computed by dividing the annual amount of interest by the price paid for the bond or security. If the security is purchased at a discount from the par or principal value, the current yield with be higher than the stated interest or coupon rate. The amount of gas required in a storage pool to maintain sufficient pressure to keep the working gas recoverable. A designation that refers to segregated clearing member firm trading activity.

Customer trading activity and funds may not be combined with non-segregated house activity within a clearing member firm. Customer Type Indicator as it pertains to electronic trading systems: A clearing indicator, required at the time of order entry, which indicates for whom the order is being entered: The maximum price range permitted a contract during one trading session.

Trading limits are set by the exchange for certain contracts. An order to buy or sell a contract during that trading day only. Establishing a position or multiple positions and then offsetting them within the same day, ending the day with no established position in the market. Failure to perform on a contract as required by exchange rules, such as the failure to meet settlement variation, a performance bond call, or to make or take delivery. Term created to assess and acknowledge expected demand for energy.

A degree day value is the difference between a day's average temperature and a previously set temperature in the U. Degree days above 65 degrees are called Cooling Degree Days because they are days when people are likely to use energy for air conditioning.

Heating Degree Days refer to days when people are likely to use energy for heating. Also referred to as contract grades. Often regarded as synonymous with cost, insurance, and freight in the international cargo trade, its terms differ from the latter in a number of ways. Risk and title are borne by the seller until such time as the commodity, such as oil, passes from shipboard into the connecting flange of the buyer's shore installation.

The seller is responsible for clearance through customs and payment of all duties. Any in-transit contamination or loss of cargo is the seller's liability. In delivered transactions, the buyer pays only for the quantity of oil actually received in storage. The term has distinct meaning when used in connection with futures contracts.

Delivery generally refers to the changing of ownership or control of a commodity under specific terms and procedures established by the exchange upon which the contract is traded. Typically, except for energy, the commodity must be placed in an approved warehouse, precious metals depository, or other storage facility, and be inspected by approved personnel, after which the facility issues a warehouse receipt, shipping certificate, demand certificate, or due bill, which becomes a transferable delivery instrument.

Delivery of the instrument usually is preceded by a notice of intention to deliver. After receipt of the delivery instrument, the new owner typically can take possession of the physical commodity, can deliver the delivery instrument into the futures market in satisfaction of a short position, or can sell the delivery instrument to another market participant who can use it for delivery into the futures market in satisfaction of his short position or for cash, or can take delivery of the physical himself.

The procedure differs for energy contracts. Bona fide buyers or sellers of the underlying energy commodity can stand for delivery. If a buyer or seller stands for delivery, the contract is held through the termination of trading. The buyer and seller each file a notice of intent to make or take delivery with their respective clearing members who file them with the Exchange. Buyers and sellers are randomly matched by the Exchange. The delivery payment is based on the contract's final settlement price.

Some futures contracts, such as stock index futures, are cash settled. Performance bond requirements applicable to all positions in the delivery month as defined by the CME clearing house.

The notice that the seller presents to the CME clearing house stating his intention to make delivery against an open short futures position. This notice is separate and distinct from the warehouse receipt or other instruments that will be used to transfer title during the actual delivery.

Those locations designated by the exchange at which actual commodities may be delivered in fulfillment of a futures contract. The measure of the price-change relationship between an option and the underlying futures price. Equal to the change in premium divided by the change in futures price. A document issued by a bank, warehouse or other depository indicating ownership of a stored commodity. Decline in the value of one currency relative to another. Occurs when, because of a change in exchange rates, a unit of one currency buys fewer units of another currency.

A financial instrument whose value is based upon other financial instruments, such as a stock index, interest rates or commodity indexes. A government's reduction of the value of its currency, generally through an official announcement.

A noticeable or marked departure from the norm, plan, standard, procedure, or variable being reviewed. Distillate fuel oil used in compression-ignition engines. It is similar to home heating oil, but must meet a cetane number specification of 40 or more. Price differences between classes, grades, and delivery locations of various stocks of the same commodity. Those petroleum products which leave significant amounts of residue in tanks.

Generally applies to crude oil and residual fuel oil. A method of paying interest by issuing a security at less than par and repaying par value at maturity. The difference between the higher par value and the lower purchase price is the interest. The interest rate that an eligible depository institution is charged to borrow short-term funds directly from a Federal Reserve Bank.

An arrangement by which the holder of the account gives written power of attorney to another person, often his broker, to make trading decisions. Also known as a controlled or managed account. Products of refinery distillation sometimes referred to as middle distillates; kerosene, diesel fuel, and home heating oil. A qualitative method of detecting undesirable sulfur compounds in petroleum distillates; that is, determining whether an oil is sour or sweet.

A Petroleum industry term referring to commercial oil and gas operations beyond the production phase; oil refining and marketing, and natural gas transmission and distribution. A notice issued by the exchange requiring firms, brokers, and out trade clerks to be available at a specified time on the Trading Floor to resolve out trades in a particular commodity.

Fines are issued against those firms who fail to comply. The application of statistical and mathematical methods in the field of economics to test and quantify economic theories and the solutions to economic problems. An EFR is a privately negotiated trade that entails the exchange of a futures position for a corresponding OTC instrument.

The number in this column represents the number of EFR transactions for the given date. An EFS is a privately negotiated trade in which a position in a futures contract is exchanged for a swap position in the same contract. Any type of voice or data communications interface, including but not limited to a computer, headset, trading device, binary options trading truth, telephone or camera.

Binary options signals provider system for placing orders, bid and offer posting, and trade execution. The CME Globex platform is an example of an electronic trading system. The trading session during which the CME Globex system is used.

Contact the CME Globex Forex factory commodity Center GCC for the current schedule of trading hours. Any occurrence or circumstance listed below which, in the opinion of the Exchange, requires immediate action and threatens or may threaten fair and orderly trading, clearing, delivery or liquidation of any contracts on the Exchange. Occurrences and circumstances which the Exchange may deem emergencies are set forth in the Rules.

The bank could be either a foreign bank or a subsidiary of a U. The average interest rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank. A method of quoting exchange rates, which measures the amount of foreign currency needed to buy one U.

Reciprocal of European Terms is another method of quoting exchange rates, which measures the U. The dollar amount by which the equity exceeds the margin requirements in a performance bond account. A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options on futures contracts.

An Exchange-for-Physical EFP trade transacted in the context of interest rate contracts see definition of Exchange-for-Physical. Stocks of commodities held in depositories or warehouses certified by an Exchange-approved inspection authority as constituting good delivery against a futures contract position.

Current total certified stocks are reported in the press for many important commodities such as Gold, Silver and Platinum. A privately negotiated and gtc stock market means exchange of an Exchange futures position for a corresponding cash position.

An EFP is one type of an authorized Exchange for Related Position EFRP trade governed by Rule A privately negotiated and simultaneous exchange of an Exchange futures position for a corresponding OTC swap or other OTC instrument. An EFR is one type of an authorized Exchange for Related Position EFRP trade governed by Rule A transaction in which the buyer of a cash commodity transfers to the seller a corresponding amount of long futures contracts, or receives from the seller a corresponding amount of short futures, at a price difference mutually agreed upon.

In this way, the opposite hedges in futures of both parties are closed out simultaneously. A privately negotiated and simultaneous exchange of an Exchange option position for a corresponding OTC option position or other OTC instrument with similar characteristics. An EOO is one type of an authorized Exchange for Related Position EFRP trade governed by Rule Shares issued by financial institutions that allow participants to trade benchmark indexes like a stock.

To invoke the right granted under the terms of an options contract to buy or sell the underlying futures contract. The option holder long is the one who exercises the option. Call holders exercise the right to buy the underlying future, while put holders exercise the right to sell the underlying future. The short option holder is assigned a position opposite to that of the option buyer. Earn real cash playing games Clearing removes the option and creates the futures how much money did robert guerrero make fighting floyd mayweather on the firms' books on the day of exercise.

A notice tendered by a brokerage firm informing the CME clearing house that the holder of the option would like to exchange their option for the underlying futures contract. The price at which the buyer of a call can purchase the commodity during the life of the option, and the price at which the buyer of a put can sell the commodity during the life of the option.

The terms "exercise price", "strike price" and "striking price" shall be synonymous and mean the price at which the futures contract underlying the options contract will be assigned upon exercise of the option.

For options contracts which are exercised into multiple futures contracts, the exercise price represents the spread price differential between the futures contracts. A chart pattern described by gap in prices near the top or bottom of a price move that may signal an abrupt turn in the market.

The last day of trading for a futures contract. The last day on which an option may be exercised and exchanged for the underlying contract. The term "expiration date" shall mean the last day on which an options contract may be exercised. Trades made outside the trading pit. There are two types of valid ex pit transactions: An exchange of cash for futures exchange for physicals involving the simultaneous purchase of cash commodities in exchange for a futures contract, at a price difference mutually agreed upon.

A transfer trade involving the transfer of a customer's account between brokerage firms. Ex-pit transactions are not guaranteed by the CME Clearing until the initial settlement is met. The amount of money option buyers are willing to pay for an option in the anticipation that, over time, a change fundamentals of futures and options markets 6th edition hull the underlying futures price will cause the option to increase in value.

In general, an option premium is the sum of time value and intrinsic value. Any amount by which an option premium exceeds the option's intrinsic value can be considered time value. Most frequently used in reference to a stock index futures contract price being in equilibrium to the underlying cash index. Generally refers to the market price of an option being in line with its theoretical value as predicted by an options pricing formula.

In the United States, federal funds are bank reserves at the Federal Reserve. Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear financial transactions. Transactions in the federal funds market enable depository institutions with reserve balances in excess of reserve requirements to lend reserves to institutions with reserve deficiencies.

These loans are usually made for 1 day only, i. The central banking system of the United States. Created in by the enactment of the Federal Reserve Act, it is a quasi-public part private, part government banking system composed of 1 the presidentially-appointed Board of Governors of the Federal Reserve System in Washington, D.

The current Federal Reserve Chairman is Dr. A ratio used to express the relationship of feeding costs to the dollar value of livestock.

The relationship of cattle prices to feeding costs. The supply of crude oil, natural gas liquids, or natural gas to a refinery or petrochemical plant or the supply of some refined fraction of intermediate product to some other manufacturing process.

A FAK order is immediately filled in whole or in part at the specified price. Any remaining quantity is eliminated. FOK orders are canceled if not immediately filled for the total quantity at the specified price or better.

An Application Program Interface API utilizing the propocol developed for international real-time information exchange designed to allow firms and Independent Software Vendors ISVs to easily integrate their order entry and routing systems with CME.

It is a software library of functions that enables a member's order management system to communicate with exchange order routing systems. Member firms can run the CME FIX API on their computers to electronically send orders to and receive fills from the CME Globex platform or from the firm's exchange floor operations. The weight of precious metal contained in a coin or bullion as determined by multiplying the gross weight by the fineness.

The term "firm" shall mean a corporation, partnership, association, sole proprietorship or other eligible entity. The highest quality sales of electric transmission service offered to customers under a filed recent turmoil in indian stock market schedule that anticipates no planned interruption.

Utility service which assumes no interruption except if residential customers' supply is threatened. Opposite of interruptible service. FirmSoft provides important alternative access to working and filled orders during earn money by consulting failures. The first day on which a notice of intent to deliver a commodity in fulfillment of a futures contract can be made by the clearinghouse to a buyer.

The clearinghouse also informs the sellers who they have been matched up with. An electronic communications protocol developed to provide a uniform method of exchanging real-time infomation specifically related to financial transactions.

The server authenticates this ID during the logon stop loss strategy forex. Only the assigned user ID may be used to logon to the CME FIX server. Market slang to indicate that all open positions have been offset and an account has no exposure to market risk. Non-standard option in which the buyer and seller can agree to terms where the strike price may exceed the eligible range of standard strikes, the expiration date can be any business date other than the standard expiration date, or the option can be defined to expire anybody trade binary options profitably review "American" or "European" style and the option can have any listed futures as its underlying.

Except as otherwise provided by the Exchange, the term "Floor" shall mean any trading floor on which Exchange contracts are listed for open outcry trading. An individual who executes orders on the Floor of the exchange for any other person and who is registered as a floor broker under the CEA.

An exchange member who trades for his own account on the Floor of the Exchange and who is registered as a floor trader under the CEA. A standard clause which indemnifies either or both parties to a transaction whenever events which the Exchange declares to be reasonably beyond the contract.

The exchange of one currency for another. Markets exist in over-the-counter, forward and FX Futures where buyers and sellers conduct foreign exchange transactions. A private, cash-market agreement between a buyer rakion hack tool 2016 gold and cash maker free download seller for the future delivery of a commodity at an agreed price.

In contrast to futures contracts, forward contracts are not standardized and not transferable. A metric that can be employed to calculate forward exchange rates. Forward Points are a function of the spot exchange rate, interest rates, and time. Forward points are added to the spot rate to obtain the forward rate. The process whereby saturated hydrocarbons from natural gas are separated into distinct parts or "fractions" such as propane, butane, ethane, etc. A transaction in which the seller provides a commodity at an agreed unit price, at a specified loading point within a specified period; it is the responsibility of the buyer to arrange for transportation and insurance.

Refined petroleum products used as a fuel for home heating and industrial and utility boilers. Fuel oil is divided into two broad categories, distillate fuel oil, also known as No. A when will the calls expire at the options clearing corporation market where the price difference between delivery months reflects the total costs of interest, insurance, and storage.

Futures contracts capable of mutual substitution the interchangeability of contracts. Standardized contracts for the purchase and sale of financial instruments or physical commodities for future delivery on a regulated commodity futures exchange. An individual or organization which solicits or accepts orders to buy or sell futures or options on futures contracts and accepts money or other assets from customer in connection with such orders. An FCM must be registered with the CFTC.

A legally binding agreement to buy or sell a commodity or financial instrument at a later date pursuant to the Rules of the Exchange. A term frequently used with reference to speculative position limits for options on futures contracts.

The futures-equivalent of an options position is the number of options multiplied by the previous day's risk factor or delta for the options series. For example, 10 deep out-of-the money options with a risk factor of 0. The delta or risk factors used for this purpose is the same as that used in delta-based margining and risk analysis systems. A board of trade designated by the Commodity Futures Trading Commission to trade futures or option contracts on a particular commodity.

Commonly used to mean any exchange on which futures are traded. CME Group including all its divisions. A national not-for-profit futures industry trade association that represents the brokerage community on industry, regulatory, political, and educational issues. The measure of the change in an option's delta given a change in the futures price. Equal to the change in delta divided by the change in futures price.

A price area at which the market didn't trade from one day to the next. See breakaway gap, exhaustion gap, and runaway gap. Also known as raw gasoline. Gasoline which is obtained directly from crude oil by fractional distillation.

Straight-run gasoline generally must be upgraded to meet current motor fuel specifications. The process of producing electric energy by transforming other forms of energy. The amount of energy produced is expressed in watthours. One billion joules, approximately equal toBritish thermal units. One million Btus equals 1. An order to be given to another member firm in clearing system, an allocation.

An order executed options futures and other derivatives john c hull 7th edition ppt clearing firm A and given to clearing firm B where it will be cleared and processed.

Give-up order indicator of "GU" is populated in F-Ex field. ACS Allocation Claim System is the CME's electronic give-up system. ACS may be utilized for trades executed and given up to a single firm, as well as trades given up to multiple firms. CME Global Command Center, the exchange department that supports and maintains CME's electronic trading system. Globex terminal operator refers to 1 any person who physically enters orders into Globex or 2 any automated trading system which enters orders into Globex, either directly or through an automated order foreign exchange indian rupee to us dollar system or independent software vendor.

All Globex terminal operators must be identified to the Exchange in accordance with the provisions of Rule Identification of Globex Terminal Operators. Also known as an open order a GTC order, in the absence of a specific limiting designation, american funds simple ira investment options remain in force during RTH and ETH until executed, canceled or the contract expires.

GTD orders remain in force during RTH and ETH through the specified date unless executed or canceled. Copper which is good for delivery against the COMEX Division high grade copper futures contract and meets the ASTM specification B One of the ways of measuring the size of the economy.

GDP is defined as the total market value of all final goods and services produced within a country in a given period of time usually a calendar year.

A method by which a clearing firm's customer margins are based on the firm's positions and applicable submitted spreads. For example, if a firm had only two accounts for two customers in its customer origin and one of those accounts had three open long positions double barrier knock out option the other had two open short positions, the firm's margin would be based on five open positions if the firm did not submit spreads rather than one net long position.

Refers to the difference between the cost of a commodity and the combined sales income of the finished products which result from processing the commodity. Various industries have formulas to express the relationship of raw material costs to sales income from finished products.

One example would be the difference between the cost of soybeans and the combined sales income of the processed soybean oil and meal. The amount required to be deposited with the Clearing House by the clearing member as a guaranty of its obligations to the Clearing House. In determining whether assets meet capital requirements, a percentage reduction in the stated value of assets. In computing the worth of assets deposited as performance bond, a reduction from market value.

A stamped impression on the surface of a precious metals bar that indicates the producer, serial number, weight, and purity of metal content. A sideways price formation at the top or bottom of the market that may indicate a major market reversal. A day in which the average daily temperature is less than 65 degrees Fahrenheit, and therefore likely to be a day in which people turn on their heat. A heating degree day is assigned a value that represents the number of degrees that days average temperature is less than 65 degrees.

For example, if a day's average temperature is 45 degrees, the Heating Degree Day HDD value for that day would be 20 If the average temperature is greater than or equal to 65 degrees, the HDD value for the day would be zero. The day would not be sufficiently cold to require heating. Crude oil with a high specific gravity and a low API gravity due to the presence of a high proportion of heavy hydrocarbon fractions.

The purchase or sale of a futures contract as a temporary substitute for a cash market transaction to be made at a later date. Usually involves simultaneous, opposite positions in the cash market and futures market. An public holiday trading hours charlestown square or firm who uses the futures market to offset price risk when intending to sell or buy the actual commodity.

See pure hedger, selective hedger. See long hedge and short hedge. Financing received from a lender for the purpose of hedging the sale and purchase of commodities. Difference between order quantity and displayed c++ trading system tutorial is hidden.

The volatility of a financial instrument based on historical returns. This phrase is global stock market crash 1929 particularly when it is wished to distinguish between the actual volatility of an instrument in the past, and the current volatility implied by the market.

The relationship of feeding costs to the dollar value of hogs. When corn prices are high relative to pork prices, fewer units of corn equal the dollar value of pounds of pork. Conversely, when corn prices are low in relation australian super investment options pds pork prices, more units of corn are required to equal the value of pounds of pork.

Any day declared to be a holiday by these rules or by a resolution of the Board on which the Exchange is closed. When any such holiday falls on Sunday, the following Monday shall be considered such holiday. When any such holiday falls on Saturday, the immediately preceding Friday shall be considered such holiday.

The purchase of either a call or put option and the simultaneous sale of the same type of option with typically the same strike price but bollinger bands 95 a different expiration month.

Also referred to as a calendar spread. Organic chemical compounds anybody trade binary options profitably review hydrogen and carbon atoms.

They form the basis of all petroleum products. Discrepancy between the amount that a seller contracted to deliver and the actual volume of power delivered. Imbalances are resolved through monetary payment.

The volatility implied by the market price of the option based on an option pricing model. In other words, it is the volatility that, given a particular pricing model, yields a theoretical value for the option equal to the current market price. The imbalance of energy rakion hack tool 2016 gold and cash maker free download back and forth that are on-going and routine between a generator of power and the centers of demand.

These imbalances are typically settled through exchanges of physical product. Term generally applies to a non-integrated oil or natural gas company, usually active in only one or two sectors of the industry. An independent marketer buys petroleum products from major or independent refiners and resells them under his own brand name or buys natural gas from producers and resells it. There are also independents which are active exclusively either in oil or gas production or refining.

A non-utility power generating company that is not a qualifying facility See Qualifying Facility. A vendor who makes and sells software products that run on one or more computer hardware or operating system platforms. At CME, ISVs provide front-end applications certified by CME for trading on the CME Globex platform.

An indicator that is representative of a whole market or market segment, usually computed by a sum product of a list of instruments' current prices and a list of weights assigned to these instruments.

CME Indicative Opening Price. Maximizes the quantities to be traded while minimizing the non-executed quantities. Forward premium or discount that is dependent on the interest rate differential between two currencies. An economic term describing conditions in which overall prices for goods and services are rising.

A term that describes the degree in, and to, which one given company participates in all phases of the petroleum industry. A spread in which the long and short legs are in two different but generally related commodity markets.

Also called an Intermarket Spread. A spread trade involving the simultaneous purchase of one delivery month of a given commodity futures contract and the sale of another delivery month of the same contract on the same exchange. CME Clearing collateral program designed to allow clearing rautatieasema helsinki forex to satisfy core, reserve and concentration performance bond requirements with a wide range of collateral, consistent with CFTC Regulation 1.

CME Clearing program in which clearing members can earn a monthly hard dollar benefit by depositing US dollar cash in a CME bank account at a select financial institution. Clearing members can satisfy a portion of their core and all of their reserve and concentration requirements by directing cash deposits into CME's account. Utility service which expects and permits interruption on short notice, generally in peak-load periods, in order to meet the demand by firm service chapter 10 the stock market and the efficient market hypothesis. Interruptible service customers usually pay a lower rate than firm service customers.

Opposite of Firm Service. A call option with a strike price lower or a put option with a strike price higher than the current market value of the underlying futures commodity. A spread involving two different months of the same commodity. Also called an Interdelivery Spread. The relationship of an option's in-the-money strike price to the current futures price. A firm or individual that solicits and accepts orders to buy or sell futures or options on futures contracts from customers but does not accept money or other assets from such customers.

An IB must be registered with the CFTC. A futures market in which the relationship between two delivery months of the same commodity is abnormal. The investigative and hearing committees of the Exchange are the Business Conduct Committee, the Clearing House Risk Committee, the Floor Conduct Committee, the Probable Cause Committee, Hearing Panels of the Board of Directors and such other committees created for this purpose by the Board.

Uncounted stocks of a commodity in the hands of wholesalers, manufacturers, and producers that cannot be identified accurately; stocks stock market options glossary pdf commercial earn money by playing league of legends but theoretically available to the market.

Uncounted stocks of a commodity in the hands of wholesalers, manufacturers and producers which cannot be identified accurately; computer basics multiple choice questions pdf outside commercial channels but theoretically available to the market.

Kerosene-type; high-quality kerosene product used primarily as fuel for commercial turbojet and turboprop aircraft engines. A gasoline jobber, for example, might buy from refiners and would resell to small distributors or consumers. A measure of the rate of change in an option's theoretical value for one-unit change in the volatility assumption. A chart formation that signals a reversal of the current trend. In an uptrend, the market must open above the previous day's close, make a new high for the trend and then close below the previous day's low.

In a downtrend, the market must open below the previous day's close, make a new how to make real money playing mmos for the trend and then close higher than the previous day's high. Key reversals on days of high volume are given more weight than others.

Amount of electricity needed to light ten watt light bulbs for a one-hour period. One thousand watts used for one hour. Market indicators showing the general direction of the economy and confirming or denying the trend rather than predicting its direction as implied by the leading indicators. Also referred to as concurrent indicators.

The actual delivered cost of oil to a refiner, taking into account all costs from production or purchase to the refinery. The final day on which notices of intent to deliver on futures contracts may be presented to the Clearing House. The final day in which long firms need to report their long position via the CME Clearing deliveries system. Market indicators that signal the state of the economy for the coming months. Some of the leading indicators include: The most current contract month in which delivery may take place in physically delivered contracts or in which cash settlement may take place in cash-settled contracts.

Financial instrument based upon the contango in the gold or silver market to finance precious metals inventory.

The ability to control large dollar amounts of a commodity with a comparatively small amount of capital. Warehouses which have been approved for the storage of copper deliverable exchange traded futures margin the COMEX Division copper futures contract.

An organization approved by the Exchange to witness and verify the weighing of copper delivered against the COMEX Division copper futures contract. Crude oil with a low specific gravity and high API gravity due to the presence of a high proportion of light hydrocarbon fractions. A contract's maximum price advance or decline from the previous day's settlement price permitted in one trading session, as determined by the exchange.

A Limit order allows the buyer to define the maximum price to pay and the seller the minimum price to accept the limit price. A Limit order remains on the book until the order is either executed, canceled or expires.

Any portion of the order that can be matched is immediately executed. Natural gas which has been made liquid by reducing its temperature to minus degrees Fahrenheit at atmospheric pressure.

Propane, butane, or propane-butane mixtures derived from crude oil refining or natural gas fractionation. For convenience of transportation, these gases are liquefied through pressurization.

A characteristic of a security or commodity market with enough units outstanding to allow large transactions without a substantial change in price. Institutional investors are inclined to seek out liquid investments so that their trading activity will not influence the market price. A condition that describes the ability to execute orders of any size quickly and efficiently without a substantial affect on the price. A computerized profile of CBOT market activity, used by technical traders to analyze price trends and develop trading strategies.

There stock market options glossary pdf a specialized display of daily volume data and time distribution of prices for every commodity traded on the Chicago Board of Trade. The amount of power carried by a utility system or subsystem, or the amount of power consumed by an electric device, at a specified time. Load is also referred to as demand. A federal program in which the government lends money at preannounced rates to farmers and allows them to use the crops they plant for the upcoming crop year as collateral.

Default on these loans is the primary method by which the government acquires stock of agricultural commodities. The price at forex broker mini accounts short term deposits are traded among major banks in London.

Basically, the interest rate that banks charge each other for loans usually in Eurodollars. The LIBOR is officially fixed once a day by a small group of large London banks, but the rate changes throughout the day.

One who has bought futures or options contracts to create an open position or owns a cash commodity. The purchase of a futures contract in anticipation of an actual purchase in the cash commodity market. Used by processors or exporters as protection against an advance in the cash price. A market position in which the trader has bought a futures contract or options on futures contract that does not offset a previously established short position.

A unit of trading used to describe a designated number of contracts.

For example, a trade quantity of one equals a "one lot;" a trade quantity of four equals a "four lot. The minimum equity that must be maintained for each contract in a customer's account subsequent to deposit of the initial performance bond. If the equity drops below this level, a deposit must be made to bring the account back to the initial performance bond level.

A term broadly applied to those multinational oil companies which by virtue of size, age, or degree of integration are among the preeminent companies in the international petroleum industry. An arrangement by which the owner of the account gives written power of attorney to someone else, usually the broker or a commodity trading advisor, to buy and sell without prior approval of the account owner.

Often referred to as a discretionary Account. The term managed futures describes an industry comprised of professional money managers know as commodity trading advisors CTAs. These trading advisors manage client assets on a discretionary basis using global futures markets as an investment medium.

Trading advisors take positions based on expected profit potential. All CTAs involved must be registered with the Commodity Futures Trading Commission CFTCa US government regulatory agency. While many casual observers most closely associate managed futures and Commodity Trading Advisors with trend following, the reality is that the strategies and approaches within managed futures vary tremendously, and that the one common unifying these is that these managers trade highly liquid, exchange-traded instruments and deep foreign exchange markets.

As a result, the terms many fund managers choose to implement, how much money do doulas make lock-ups, gates, side pockets, and penalties for early redemptions, rarely apply to investments in managed futures. Liquidity and transparency also simplify risk management, and investing via separately managed accounts, a common practice among managed futures investors, mitigates the risk of fraud since investors retain custody of assets.

Market Data Application Programming Interface, to be used in conjunction with CME's order entry APIs. CME developed the Market Data API,which allows firms to receive real-time market data from the electronic markets, and at a later date, also from the open outcry markets. An order that automatically becomes a market order if the price is reached.

An MIT order to buy becomes a limit order if and when the instrument trades at a specific or lower trigger price; an MIT order to sell becomes a brecon livestock market report order if and when the instrument trades at a specified or higher trigger price. On CME Globex, this order type is only available via CME Globex Trader, which is scheduled to be decommissioned by the end of A firm or person with trading privileges forex b1 zertifizierung an exchange who has an obligation to buy when there is an excess of sell orders and to sell when there is an excess of buy orders.

In the futures industry, this term is sometimes loosely used to refer to a floor trader or local who, in speculating for his own account, provides a market for commercial users of the market. An order placed at any time during the trading session to immediately execute the entire order at the best available offer price for buy orders or bid price for sell orders.

A market order entered before an opening, to be executed immediately upon the open of the trading session. An organized venue, apart from CME, for the trade of securities, commodities or derivative instruments including, but not limited to, futures, options, options on futures or Security Futures Products.

Market Profile is an analytical tool that organizes price and time information to reveal trends and patterns as they develop. Its ability to identify areas where price is being accepted and where price is being rejected allowing traders of any market to adjust their trading accordingly.

A person employed by the exchange and located in or near the trading pit who records prices as they occur how to become a successful trader in forex trading.

Unlike a conventional Market order, where customers are at risk of having their orders filled at extreme prices, Market with Protection orders are filled within a predefined range of prices the protected range. If the entire order cannot be filled within the protected range, the unfilled quantity remains on the book as a Limit order at the limit of the protected range.

To debit or credit on a daily basis a margin account based on the close of that day's trading session. In this way, buyers and sellers are protected against the possibility of contract default. The execution of the buy and sell orders that together consummate a trade; consists of should i buy solo oil shares or more contracts and occurs when the same price is specified by buy and sells orders, for a specified number of contracts.

Period within which a futures contract can be settled by delivery of the actual commodity; the period between the first notice day and the last trading day of a commodity futures contract. The maximum amount the contract price can change up or down during one trading session, as stipulated by exchange rules.

Consult CME Clearing contract specifications for specific price limit information. Amount of electricity needed to light ten thousand watt light bulbs for a one-hour period. One million watts used for one hour. The minimum equity that must be maintained for each contract in a member's account subsequent to deposit of the initial margin.

Also see member rate. The trading right associated with a Class B Share in any of the following classes: Class B-1 CME MembershipClass B-2 IMM MembershipClass B-3 IOM Membership and Class B-4 GEM Membership. A membership or membership interest may only be purchased or sold with its associated Class B Share. Hydrocarbons that best foreign exchange rates nyc in the so-called "middle boiling range" of refinery distillation.

Examples are heating oil, diesel fuels, and kerosene. The smallest increment of price movement possible in trading a given contract often referred to as a tick. The minimum unit by which the price of a commodity can fluctuate, as established by the Exchange. The amount of money in the economy, consisting primarily of currency in circulation plus deposits in banks: A complex mixture of relatively volatile hydrocarbons, with or without when the stock market crashes quantities of additives, which have been blended to form a fuel suitable for use in spark-ignition engines.

A statistical price analysis method of recognizing different price trends. A moving average is calculated by adding the prices for a predetermined number of days and then dividing by the number of days. In the CME and the Singapore Exchange SGX established a mutual offset agreement, which resulted in south korea stock market graph implementation of the Mutual Offset System MOS.

In accordance with this agreement, trades executed on one exchange can be transferred to the books of a firm on the other exchange. Currently only Eurodollar, Euroyen, Euroyen LIBOR and Nikkei Yen futures are eligible contracts for MOS. An open futures position that is not covered by an offsetting futures position or by an options contract against which it can be spread.

An open options contract that is not covered by an offsetting position in the underlying futures commodity or by another options contract against which it can be spread.

One of the three basic hydrocarbon classifications found naturally in crude oil. Naphthenes are widely used as petrochemical feedstocks. A volatile, colorless product of petroleum distillation. Used primarily as a paint solvent, cleaning fluid, and blendstock gtc stock market means gasoline production. Refers to a futures contract based upon a Security Index that is considered narrow-based as defined in Section 1a 25 of the Commodity Exchange Act.

The National Futures Association. NFA is an independent self-regulatory organization for the U. Established in —the National Introducing Brokers Association is one of the foremost, nationally recognized organizations representing professionals dollar rate in kenya central bank the futures and options industry.

A naturally occurring mixture of hydrocarbon and non-hydrocarbon gases found in porous rock formations. Its principal component is methane.

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A general term for all liquid products separated from natural gas in a gas processing plant. NGLs include propane, butane, ethane, and natural gasoline. The nearest active trading month of a futures or options on futures contract.

Also referred to as the lead month. A chart in which the yield level is plot on the vertical axis and the term to maturity of debt instruments fineco forex spread similar creditworthiness is plotted on the horizontal axis. The yield curve is positive when long-term rates are higher than short-term rates. However, the yield curve is referred to as negative or inverted as short term rates begin to rise above longer term ones.

A legal document issued by a warehouse describing and guaranteeing the existence of a specific quantity and sometimes a specific grade of a commodity stored in the warehouse.

Industry term referring to the net free on board cost of product offered on a delivered or cost, insurance, and freight basis. It is derived by subtracting all costs of shipment from the landed price.

A method by which a clearing firm's margins are based on the net position, e. For example, if a firm had only two accounts for two customers in its customer segregated origin and one of those accounts had three open long positions and the other had two open short positions, the firm's margin isakas forex indicators be based on the one net long position.

The difference between an individual or firm's open long contracts and open short contracts in any one commodity. The declared price for a futures month sometimes used in place of a closing price when no recent trading has taken place in that particular delivery month; usually an average of the bid and asked prices. A clearing member of the exchange that is not required to register with the CFTC as a futures commission merchant because it handles no U. A group formed in by the electric utility industry to promote the reliability and adequacy of bulk power supply in the electric utility systems of North America.

NERC consists of 10 regional reliability councils and encompasses essentially all the power regions of the contiguous United States, Canada, and Mexico. A discretionary note on an order telling the floor broker that he or she won't be held accountable if the trade is executed outside the requirements of the order. Except as otherwise specifically provided, a notice in writing emailed to or personally served upon the person to be notified, left at his usual place of business during business hours or mailed by U.

First Class Mail, Certified Mail, Registered Mail or by overnight delivery to his last known place of business or residence. The day the buyer with the oldest long position is matched with the seller's intent and both parties are notified of delivery obligations. The underlying value face valuenormally expressed in U. A measure of the resistance of gasoline to pre-ignite or knock when burned in an internal combustion engine.

To remove an open position from an account by establishing a position equal to or opposite the existing position, making or taking delivery, or exercising an option i. For a short hedger, to buy back futures and sell a commodity.

For a long hedger, to sell back futures and buy a commodity. Also called lifting a hedge. An account of one Futures Commission Merchant FCMthe originating FCM, which resides on the books of another FCM the carrying FCMin which the transactions of two or more persons are combined and carried in the name of the originating FCM rather than in the name of the individual customers.

Refers to hours of the business day when demand is at its peak. For example, the NYMEX Division California-Oregon border and Palo Verde electricity futures contracts define the on-peak period from the hour ending to the hour ending 6 A. The period at the beginning of the trading session officially designated by the exchange during which all transactions are considered made "at the opening.

The total number of futures contracts long or short in a delivery month or market that has been entered into and not yet offset or fulfilled by delivery Also known as Open Contracts or Open Commitments.

Each open transaction has a buyer and a seller, but for calculation of open interest, only one side of the contract is counted. The buying and selling of government securities Treasury bills, notes, and bonds by the Federal Reserve. A contract that gives the bearer the right, but not the obligation, to be long or short a futures contract at a specified price within a specified time period.

The specified price is called the strike price. The futures contract that the long may establish by exercising the option is referred to as the underlying futures contract. The price a buyer pays for an option. Premiums are arrived at through open competition between buyers and sellers on the trading floor of the exchange.

A request by a trader to buy or sell a given futures instrument with specified conditions such as price, quantity, type of order. An order qualifer that consists of two linked orders, typically but not always a Limit order and a Stop order, that both work until one order is filled, at which time the other order is canceled. A payment guarantee provided by a buyer's or in some cases, the seller's paying bank to CME's agent bank to guarantee payment on a currency delivery transaction.

Orders to Pay are due by 1: Note that not all order types are eligible for execution in a trading pit on Globex and through open outcry. Additionally, order types eligible for both venues may have different meanings depending on whether the order is to be executed in a trading pit via open outcry or through Globex.

Absent any restrictions, a "DRT" Not-Held Order means any order giving a person complete discretion over price and time in execution of the order, including discretion to execute all, some, or none of the order. A member or clearing member shall not accept an order containing the phrase "with a tick, you are held" or similar such language.

An instruction to the clearing firm to enter a stop order after execution of a previous order has been achieved. A designation, added to an order, instructing the broker to fill the order immediately in its entirety or not all.

Futures & Options Trading for Risk Management - CME Group

If the order is not filled immediately in its entirety, it is cancelled. An order with instructions to be executed at a specific price "limit price" or better. An order with instructions to be executed upon receipt by a floor broker at the best available price.

A sell buy order placed above below the market which becomes a market order when the designated price is touched. A combination of two orders, in which the execution of either one automatically cancels the other. An order which remains in force until cancelled. Without such designation, all unfilled orders are cancelled at the end of the Regular Trading Hours Session. An order that is to be executed during the time period designated by the Exchange as the Regular Trading Hours session opening range time period.

Any remaining unfilled quantity not executed during the time period designated as the opening range will be deemed cancelled. An order which becomes a market order when the price designated on the order the "Stop Price" is elected as described below. A "Buy Stop" order is placed above the market, and is elected only when the market trades at or above, or is bid at or above, the Stop Price. A "Sell Stop" order is placed below the market, and is elected only when the market trades at or below, or is offered at or below, the Stop Price.

A stop order which is in effect only during the closing range. It becomes a market order if, during the closing range, the market: A stop order which becomes executable at its limit price or better, when and if the market: An order which displays only a small portion of the order to the marketplace. An order which is executed only if a certain minimum quantity of that order can be immediately matched. When the stop price is triggered, the order enters the order book as a limit order with the limit price equal to the trigger price plus or minus the predefined protected range.

An order eligible to be entered into Globex that does not contain a duration qualifier will be cancelled if not filled during the Trading Day in which it was received or, if it was received between Trading Days, during the next Trading Day. An order may specify one of the following duration qualifiers:. An order that will be canceled if not filled by the conclusion of the Globex trade date for which it was entered. An order immediately filled in whole or in part at the specified price, with any remaining quantity canceled or eliminated.

An order which will remain in force through a specified trade date unless executed or canceled, or until the contract expires. The type of account house, customer, or customer non-segregated for which a trade was executed. Also see segregation type. A planned outage is the shutdown of a generating unit, transmission line, or other facility for inspection and maintenance, in accordance with an advance schedule.

A forced outage is the unplanned loss of service of a generating unit, transmission line, or other facility for purposes other than inspection and maintenance. A term used to describe an option that has no intrinsic value. A call option with a strike price higher or a put with a strike price lower than the current market value of the underlying futures commodity.

Since it depends on current prices, an option can vary from in the money to out of the money with market price movements during the life of the options contract. A technical opinion of a market which has risen too high in relation to underlying fundamental factors. A technical opinion of a market which has fallen too low in relation to underlying fundamental factors. A market in which custom-tailored contracts such as stocks and foreign currencies are bought and sold between counterparties and are not exchange traded.

The simultaneous purchase or sale of an equally weighted, consecutive series of four futures contracts, quoted on an average net change basis from the previous day's settlement price.

Packs provide a readily available, widely accepted method for executing multiple futures contracts with a single transaction. A subcommittee selected in accordance with committee procedure to adjudicate or make a particular determination. A decision of a panel shall be deemed a decision of the committee.

An individual appointed to an Exchange committee who is entitled to participate in a decision on any matter under consideration by the committee or panel thereof. A term used to denote trade in non-physical oil futures, forwards, swaps, etc. The grade or grades specified in a given futures contract for delivery. A contract may permit substitutions for and deviations from the par grade subject to specified premiums or discounts.

Also know as Basis Grade. An exchange or clearing house that has entered into a business relationship with the Exchange for clearing, order routing or any other business purpose. A Partner Clearinghouse shall be considered a Clearing Member for purposes of the Rules except to the extent otherwise provided in an agreement between the Exchange and the Partner Clearinghouse.

A government program in which farmers who comply with a voluntary acreage-control program and set aside an additional percentage of acreage specified by the government receive certificates that can be redeemed for government-owned stocks of grain. The minimum amount of funds that must be deposited as a performance bond by a customer with his broker, by a broker with a clearing member or by a clearing member with the Clearing House.

A request from a brokerage firm to a customer to bring performance bond deposits up to minimum levels or a request by CME Clearing to a clearing firm to bring clearing performance bonds back to levels required by the Exchange Rules. Most exchanges refer to this as a "margin call. The minimum dollar deposit required by CME Clearing from its clearing members in accordance with their positions. This is one of the financial safeguards that help to ensure that clearing members usually companies or corporations perform on their customers' open futures and options contracts.

It shall include the singular or plural, and individuals, associations, partnerships, corporations and trusts. An intermediate chemical derived from petroleum, hydrocarbon liquids, or natural gas, such as ethylene, propylene, benzene, toluene, and xylene.

A generic name for hydrocarbons, including crude oil, natural gas liquids, refined, and product derivatives. The United States is divided into five distinct marketing regions in which prices might differ due to variations in the supply or demand.

Typically at expiration, the risk to a trader who has sold an option that has a strike price identical to, or pinned to, the underlying futures price. In this case, the trader will not know whether he will be required to assume his options obligations. A pipe through which oil or natural gas is pumped between two points, either offshore or onshore. The area on the trading floor of where trading in a specific futures or options contracts is conducted by open outcry.

An individual simultaneously buys and sells the same amount of the same currency with the same counterparty, with the two legs of the transaction maturing on different dates and trading at different exchange rates. A graph of prices charted where Xs denote price increases and Os represent price decreases. A method used by technical analyst to help anticipate price movement.

An obligation to perform in the futures or options market. A long position is an obligation to buy at a specified date in the future. A short position is an obligation to sell at a specified date in the future. However a vast majority of all open positions are simply offset prior to expiration. See also call option and put option. The position adjustment may increase or decrease a position in a given contract and origin by equal quantities long and short to correct discrepancies in position reporting.

The adjustment is made to reconcile out of balance trade conditions between clearing records and transaction records. Also referred to as trading limits. A trader who takes a position in anticipation of a longer term trend in the market. Unlike a day trader a position trader hopes to maintain the position over a longer period of time.

The price some refiners will pay for crude of a certain API gravity from a particular field or area. A temperature 5 degrees Fahrenheit higher than the temperature at which crude oil or a refined product stops flowing.

A wholesale power entity that has registered with the Federal Energy Regulatory Commission to buy and sell wholesale power from and to each other and other public entities at market-derived prices. Power marketing companies include investor-owned, utility-affiliated companies; natural gas marketing companies; financial intermediaries; independent power producers; and entrepreneurs.

Typically, power marketers do not own generating facilities. The president of the Exchange, or one duly authorized to act in lieu of and with the authority of the President.

The President of the Clearing House, or one duly authorized to act in lieu of and with the authority of the President of the Clearing House. A chart pattern of the price movement of a commodity when the low price of one bar on a Bar Chart is higher than the high of the preceding bar or inversely, the high is lower than the low of the preceding bar ; depicting a price or price range where no trades take place.

The price patterns are used by technical analysts to try to recognize changes in a price trend. The maximum daily price fluctuations on a futures contract during any one session, as determined by the Exchange.

Also known as limit. Market prices that are universally available in real time, where all market participants have equal access to the same markets and prices at the same time. This facilitates a fair and anonymous trading environment where the best bid and best offer have priority.

A level playing field. Among the criteria are capital requirements and meaningful participation in the Treasury auctions.

Stocks of crude oil or refined products held in storage at leases, refineries, natural gas processing plants, pipelines, tankfarms, and bulk terminals that can store at least 50, barrels of refined products. Plant which separates natural gas into methane and the various other gases e.

A measure of the average change in prices received by domestic producers for their output. Most of the data is collected through a systematic sampling of producers in manufacturing, mining, and service industries, and is published monthly by the Bureau of Labor Statistics.

A natural hydrocarbon occurring in a gaseous state under normal atmospheric pressure and temperature, however, propane is usually liquefied through pressurization for transportation and storage. Propane is primarily used for rural heating and cooking and as a fuel gas in areas not serviced by natural gas mains and as a petrochemical feed stock.

An intra, or inter-facility transfer. For example, when one pipeline pumps crude oil or refined products from its tanks or mainline into the mainline or storage tank of the receiving pipeline. A statement issued by an FCM to a customer when his or her futures or options position has changed, showing the number of contracts involved, the prices at which the contracts were bought or sold, the gross profit or loss, the commission charges, and the net profit or loss on the transactions.

The date on which a long position, used to assign agricultural deliveries, is established on a clearing firm's books. A person who places a hedge to lock in a price for a commodity. He or she offsets the hedge and transacts in the cash market simultaneously. A contract that provides the purchaser the right but not the obligation to sell a futures contract at an agreed price the strike price at any time during the life of the option.

A put option is purchased in the expectation of a decline in price. The time for which the order is valid FAK, Session, FOK, Day, GTC, GTD. See CME Globex Order Duration Qualifiers. A generator or small power producer that meets certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission, and has filed with FERC for QF status or has self-certified.

QFs are physical generating facilities. The difference between the highest and lowest prices recorded during a given time period, trend, or trading session. This strategy, which applies to both puts and calls, involves buying or selling options at one strike price in greater number than those bought or sold at another strike price.

One method of quoting exchange rates, which measured the U. An act carried out by a seller who has tendered a live cattle delivery certificate that the assigned buyer has retendered. A seller will do this to collect the retender fee. To reclaim, the original seller establishes a long position in the pit and submits a reclaim notice. If no one demands the certificate of delivery, the seller takes assignment of his own retendered certificate and collects the accrued retender fee, thus eliminating the delivery obligation.

The price of future contract used as "reference" e. For a contract's CME Globex trading hours on a given calendar day beginning after that contract's RTH session on that calendar day and ending no later than 4: For a contract's CME Globex trading hours beginning at or after 4: A company that acts as a wholesaler of gasoline, heating oil, or other products which operates its own refinery; may also retail and buy additional supplies to supplement its own refining output.

The use of heat and catalysts to effect the rearrangement of certain hydrocarbon molecules without altering their composition appreciably; for example, the conversion of low-octane naphthas or gasolines into high-octane number products. A person employed by, and soliciting business for, a commission house or futures commission merchant.

See also Associated Person. Those hours designated for open outcry trading of the relevant product as determined from time to time. An agreement between a seller and a buyer, usually in U. An electronic message disseminated on Globex for the purpose of soliciting bids or offers for specific contract s or combinations of contracts.

The minimum amount of cash and liquid assets as a percentage of demand deposits and time deposits that member banks of the Federal Reserve are required to maintain. Heavy fuel oil produced from the residue in the fractional distillation process rather than from the distilled fractions. The place on a chart where the selling of futures contracts is sufficient to halt a rise in prices. An act that an assigned long may perform to avoid obligation to receive delivery of live cattle.

To avoid obligation, the assigned long must establish a short position on the business day following assignment and pay a retender fee. As pertaining to an existing futures position, exiting your current delivery month and entering the next expiring month. For example, if long a December contract, offsetting that position by selling and entering a postion in the next expiration by buying.

A completed transaction involving both a purchase and a liquidating sale, or a sale followed by a covering purchase. A round turn counts both the buy and the sell as one event. In a typical exchange volume measurement, a one-contract trade would be counted as one round turn i. From the customer's perspective, a round turn represents two filled orders from his or her brokerage firm - one to take a position and one to offset that position i.

The Certificate of Incorporation, By-Laws, rules, interpretations, orders, resolutions, advisories, notices, manuals and similar directives of the Exchange, and all amendments thereto.

The trading and clearing of all Exchange futures, options on futures, cleared-only and spot contracts shall be subject to the rules. To trade for small gains. Scalping normally involves establishing and liquidating a position quickly, usually within secconds. A speculator on an exchange floor who trades in and out of the market on very small price fluctuations. The scalper, trading in this manner, provides market liquidity but seldom carries a position overnight.

A contract based on securities products as such term is defined by 1a 32 of the Commodity Exchange Act. The account which holds open position for customer segregatedfor the house non-segregatedand for customer non-segregated origins.

A person who takes a short futures position or grants sells a commodity option. An option seller is also called a marker, grantor, or granter, or writer. A condition of the market in which there is a scarcity of goods available and hence sellers can obtain better conditions of sale or higher prices. Opposite of buyer's market. An extraordinarily high volume occurring suddenly in a downtrend, signaling the end of the trend. Selling futures contracts to protect against possible declining prices of commodities that will be sold in the future.

At the time the cash commodities are sold, the open futures position is closed by purchasing an equal number and type of futures contracts as those that were initially sold. The practice of offsetting the price risk inherent in any cash market position by taking an equal but opposite position in the futures market. Hedgers use the futures markets to protect their business from adverse price changes.

Options for months for which there are no futures contracts. The underlying futures contract for a serial option month would be the next nearby futures contract. The official daily closing price of futures and options on futures contracts, as determined in accordance with Ruleused by the Clearing House for marking all open positions at the close of the daily settlement cycle.

The change in dollar amount calculated by the Clearing House for clearing members figured to the daily settlement price on the basis of their positions. A Seek Limit order has a price limit automatically assigned up to the fifth best price level to the order when sent and seeks to fill the entire quantity. Available only on CME Globex Trader. An open futures or options position where you have been a net seller. The opposite of being long. The sale of a futures contract in anticipation of a later cash market sale.

Used to eliminate or minimize the possible decline in value of ownership of an approximately equal amount of the cash financial instrument or physical commodity. Interest rates on loan contracts--or debt instruments such as Treasury bills, bank certificates of deposit, or commercial paper--having maturities of less than one year. Often called money market rates. Every contract that trades has two sides - the buy side and the sell side.

Taken together, these two sides equal one unit of volume known as a round turn. Where a single futures contract trades in two locations at the same time. Usually on a trading floor via open outcry as well as on an electronic trading platform. Natural gas found with a sufficiently high quantity of sulfur to require purifying prior to shipment or use.

Industry terms which denote the relative degree of a given crude oil's sulfur content. Sour crude refers to those crudes with a comparatively high sulfur content, 0. The Standard Portfolio Analysis of Risk SPAN Performance Bond System. A program that determines portfolio performance bond requirements for futures, options, cash, and other instruments.

SPAN is a portfolio based approach to risk management and performance bond calculations. The spark spread reflects the costs or anticipated costs of producing power from a specific facility.

It can be used as a method of converting millions of Btus to megawatt hours and vice versa, and thus relates well to the electricity and natural gas futures contracts. The spread is simply the heat rate a proxy for efficiency of a specific generating unit or power system the number of Btus needed to make one kilowatt hour of electricitymultiplied by the cost of energy expressed as dollars per British thermal units Btus.

For example, if it takes 10, Btus to make one kilowatt hour of electricity, the formula can be simplified by multiplying the price per million Btus MMBtu by 10 to equate one MMBtu of natural gas to one megawatt hour Mwh of electricity. The usefulness of the spread evaluation is dependent on the market price for power which reflects the relationship of the supply and demand for power, not the efficiencies of the generating units. Other costs affecting the price of power using the spark spread evaluation include those of gas transportation, power transmission, plant operations and maintenance, and fixed costs.

Because the electricity futures contract is specified in lots of megawatt hours, and the natural gas futures contracts are specified in units of 10, million Btus, one power contract equates to 0. In the normal process of negotiation, seller will guarantee buyer that the product or crude to be sold will meet certain specified limits. The ratio of the density of a substance at 60 degrees Farenheit to the density of water at the same temperature.

The maximum position, either net long or net short, in one commodity futures or options, or in all futures or options of one commodity combined, which may be held or controlled by an entity without a hedge exemption as prescribed by an exchange or the Commodity Futures Trading Commission. The actual physical commodity as distinguished from the futures contract that is based on the physical commodity. The market in which cash transactions for the physical commodity occurs -- cattle, currencies, stocks, etc.

The price at which a physical commodity for immediate delivery is selling at a given time and place. The price difference between two contracts. Holding a long and a short position in two or more related futures or options on futures contracts, with the objective of profiting from a change in the price relationship.

A representation of the risk associated with a financial instrument stocks, bonds, etc. The larger the standard deviation in a given period, the greater implied risk. Risk is an important factor in determining how to efficiently manage investments and understanding the standard deviation gives investors a statistical basis for their decisions.

When corn prices are high relative to cattle prices, fewer units of corn equal the dollar value of pounds of cattle. Conversely, when corn prices are low in relation to cattle prices, more units of corn are required to equal the value of pounds of beef. A statistic reflecting the composite value of a selected group of stocks. How a particular stock index tracks the overall market depends on the sampling of stocks, the weighing of individual stocks, and the method of averaging used to establish the index.

Many indexes are used to benchmark the performance of portfolios such as mutual funds. A stop order that is executed only if the stop price is triggered during the closing range of the trading session. A resting Stop Limit order is triggered when the designated price is traded on the market. The order is executed at all price levels between the trigger price and the limit price.

If the order is not fully executed, the remaining quantity of the order remains in the market. A buy Stop Limit order must have a trigger price greater than the last traded price for the instrument. A sell Stop Limit order must have a trigger price lower than the last traded price. An order that becomes a market order when a particular price level is reached.

A sell stop is placed below the market; a buy stop is placed above the market. Sometimes referred to as Stop Loss Order. Unlike a conventional Stop order, where customers are at risk of having their orders filled at extreme prices, Stop with Protection orders are filled within a predefined range of prices the protected range.

A Stop with Protection order is triggered when the designated price is traded on the market. The order then enters the order book as a Limit order with the limit price equal to the trigger price, plus or minus the pre-defined protected range. The protected range is typically the trigger price, plus or minus 50 percent of the No Bust range for that product.

The order is executed at all price levels between the trigger and limit price. If the order is not completely filled, the remaining quantity rests in the market at the limit price. A buy Stop order must have a trigger price greater than the last traded price for the instrument. A sell Stop order must have a trigger price lower than the last traded price. The purchase or sale of an equal number of puts and calls, with the same strike price and expiration dates.

A long straddle is a straddle in which a long position is taken in both a put and a call option. A short straddle is a straddle in which a short position is taken in both a put and a call option. The purchase of a put and a call, in which the options have the same expiration and the put strike is lower than the call strike, called a long strangle. Also the sale of a put and a call, in which the options have the same expiration and the put strike is lower than the call strike, called a short strangle.

The simultaneous purchase or sale of futures positions in consecutive months. The average of the prices for the futures contracts bought or sold is the price level of the hedge.

A six-month strip, for example, consists of an equal number of futures contracts for each of six consecutive contract months. Also known as a calendar strip. The quantity of a commodity that producers are willing to provide to the market at a given price.

The place on a chart where the buying of futures contracts is sufficient to halt a price decline. A custom-tailored, individually negotiated transaction designed to manage financial risk, usually over a period of one to 12 years. Swaps can be conducted directly by two counterparties, or through a third party such as a bank or brokerage house.

The writer of the swap, such as a bank or brokerage house, may elect to assume the risk itself, or manage its own market exposure on an exchange. Swap transactions include interest rate swaps, currency swaps, and price swaps for commodities, including energy and metals. In a typical commodity or price swap, parties exchange payments based on changes in the price of a commodity or a market index, while fixing the price they effectively pay for the physical commodity. The transaction enables each party to manage exposure to commodity prices or index values.

Settlements are usually made in cash. Simultaneous purchase and sale of currencies or interest rate products in spot and forward market transactions. A combination of a long futures contract and a long put, called a synthetic long call. Also, a combination of a short futures contract and a short put, called a synthetic short call. A combination of a put and a call with the same strike price, in which both are bullish, called synthetic long futures.

Also, a combination of a put and a call with the same strike price, in which both are bearish, called synthetic short futures. A combination of a short futures contract and a long call, called a synthetic long put. Also, a combination of a long futures contract and a short call, called a synthetic short put.

Futures price information that is consistent with spot market convention where positive or negative forward points are added to the futures price to produce an equivalent spot price. With the FIX protocol, a delimited message component that contains a particular purpose-not just start or stop.

Tag 50 in a message indicates the real trader's ID, not just the company he or she works for. An expected selling or buying price. For long and short hedges with futures: A schedule of rates or charges permitted a common carrier or utility; pipeline tariffs are the charges made by pipelines for transporting crude oil, refined products, or natural gas from an origin to a destination. A TAS is an order type that specifies the day's settlement price as the order price.

This column represents the number of TAS transactions for the given date. An approach to forecasting commodity prices which examines patterns of price change, rates of change, and changes in volume of trading and open interest, without regard to underlying fundamental market factors.

After entering a unique ID and PIN, users quickly navigate through the menu prompts to expedite their requests. An option's value generated by a mathematical model given certain prior assumptions about the term of the option, the characteristics of the underlying futures contract, and prevailing interest rates. The measure of the change in an option's premium given a change in the option's time until expiration. Equal to the change in the option's premium divided by the change in time to expiration.

The minimum fluctuation in price allowed for a futures or options contract during a trading session as specified by the contract terms in CME Rulebook. Summarized display of almost instantaneous information on instruments of an exchange. Provides information on performed trades by displaying the instrument and the last trade price in scrolling mode. The selling of a nearby option and buying of a more deferred option with the same strike price. Also known as a Calendar or Horizontal Spread.

Part of the order-routing process in which the time of day is stamped on an order. An order is time-stamped when it is 1 received on the trading floor, and 2 completed 3 returned to the customer. The amount by which an option's premium exceeds its intrinsic value. Usually relative to the time remaining before the option expires.

Total Return Asset ContractsSM TRAKRS are designed to enable customers to track an index of stocks, bonds, currencies or other financial instruments. TRAKRS are futures contracts based on an index that is calculated on a total return basis. Declared dividends and other distributions are included in the calculation of the index.

The term "trade" shall mean any purchase or sale of any commodity futures or options contract made on the Exchange. See "day trader", "floor broker", "position trader," and "scalper". A trading day shall mean the hours of trading as determined by the board for each contract starting with the opening of trading and ending with the close of trading for such contract.

Also referred to as position limit. Company that transports gas for resale on its own behalf or transports gas for others. Also known as a pipeline company. A Treasury bill is a short-term U. Unlike a bond or note, a bill does not pay a semi-annual, fixed rate coupon. A bill is typically issued at a price below its par value and is therefore a discounted instrument.

The level of the discount depends on the level of prevailing interest rates. In general, the higher short-term interest rates are, the greater the discount. The return to an investor in bills is simply the difference between the issue price and par value. Government-debt security with a coupon and original maturity of more than 10 years. Interest is paid semiannually. The stock, commodity, futures contract, or cash index against which a futures or options contract is valued.

The futures contract that may be purchased in the case of a call or sold in the case of a put upon the exercise of the option. Payment made on a daily or intraday basis by a clearing member to the clearinghouse to cover losses created by adverse price movement in positions carried by the clearing member, calculated separately for customer and proprietary positions. Buying and selling puts or calls of the same expiration month but having different strike prices.

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A private data network that makes use of the public telecommunication infrastructure, maintaining privacy through the use of a tunneling protocol and security procedures. A method of measuring a given liquid's resistance to flow, usually decreasing with increasing temperatures. Material with higher viscosity is more resistant to flow. An alternative means of quoting options, or combinations involving options, by bidding or offering the implied volatility.

Any transactions quoted in volatility terms will be translated into price terms for clearing purposes by means of a standard options pricing model maintained and disseminated by the exchange. The number of contracts in futures or options on futures transacted during a specified period of time. A document indicating a specific contract and location information of a commodity in storage; commonly used as the instrument of transfer of ownership in both cash and futures transactions.

A document of title issued by a warehouse or depository for a specific lot of stored metal that meets the specifications of the corresponding Exchange metals futures contract.

Metal that is "on warrant" is eligible for delivery against a short position on the Exchange. A grade of crude oil deliverable against the New York Mercantile Exchange light, sweet crude oil contract. Nominally, the benchmark crude of the U. An individual or organization that solicits or accepts orders to buy or sell futures contracts or options on futures and accepts money or other assets from customers to support such orders.

Also referred to as "commission house" or Futures Commission Merchant FCM. A note on an order telling the floor broker to use his or her own good judgment in filling the order.

One day's change in the futures' interest rate - equal and opposite to change in the settlement price. A chart that graphically depicts the yields of different maturity bonds of the same credit quality and type. Yield is depicted on the vertical axis and maturity on the horizontal axis.