American-style options
Options that can be exercised at any time on or before the expiration date.
AON (all or none) AON
Order type: At order entry, if it can execute in total, then it executes. Otherwise it stays in the order book until it can execute in total.
Arbitrage
The simultaneous purchase and sale of identical or equivalent financial instruments or commodity futures in order to benefit from a discrepancy in their price relationship.
Ask
Also called "offer." A motion to sell. Indicates a willingness to sell a futures contract at a given price.
Assignment
The designation of an option writer for fulfillment of his obligation to sell the underlying futures contract (call options writer) or buy the underlying futures contract (put option writer) upon notice from the Clearing House. Notice to the seller of an option that has been exercised by the buyer.
At the market
See "Market Order"
At-the-money
An option with a strike price equal to the underlying futures price.
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Back months
The futures or options on futures months being traded that are farthest from expiration. Also called deferred or distant months.
Bar chart
A graph of prices, volume and open interest for a specified time period used by the chartist to forecast market trends.A daily bar chart plots each trading session's high, low and settlement prices.
Basis
The difference between the spot or cash price of a commodity 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.
Bear
One who believes prices will move lower.
Bear call spread
The purchase of a call with a high strike price against the sale of a call with a lower strike price. The maximum profit receivable is the net premium received (premium received - premium paid), while the maximum loss is calculated by subtracting the net.
Bear market (bear/bearish)
A market in which prices are declining. A market condition in which the prices of securities are falling or are expected to fall.
Bearish key reversal
A bar chart formation that occurs in an uptrending market when the day's high is higher, low is lower and close is below the previous day's. Can signal an upcoming downtrend.
Beta
A measure correlating stock price movement to the movement of an index. Beta is used to determine the number of contracts required to hedge with stock index futures or futures options.
Bid
The price that the market participants are willing to pay.
Bid (or buy)
An offer to buy a specific quantity of a commodity at a stated price. The price that the market participants are willing to pay.
Black Scholes Model
A model used to calculate the value of a European option. Developed in 1973 by Fisher Black and Myron Scholes, it utilizes the stock.
Box Spread
A dual option position involving a bull and bear spread with identical expiry dates. This investment strategy provides for minimal risk. Additionally, it can lead to an arbitrage position as an investor attempts to lock in a small return at expiry.
Breakaway gap
A gap in prices that signals the end of a price pattern and the beginning of an important market move
Breakeven
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.
Bull
One who expects prices to rise.
Bull market
A market in which prices are rising.
Bull spread
A spread involving the purchase of the lower strike call and the sale of the higher strike call, called a bull call spread. Also, a spread involving the purchase of the lower strike put and the sale of the higher strike put.
Bullish key reversal
A bar chart formation that occurs in a downtrending market when the day's high is higher, low is lower and close is above the previous day's. Can signal an upcoming uptrend.
Bundle
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.
Butterfly Spread
An option strategy combining a bull and bear spread. It uses three strike prices. The lower two strike prices are used in the bull spread, and the higher strike price in the bear spread. Both puts and calls can be used.
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Call
An option to buy a commodity, security or futures contract at a specified price any time between now and the expiration date of the option contract.
Call breakeven
See "breakeven."
Call option
An option contract which gives the buyer the right, but not the obligation, to purchase a specific futures contract at a fixed price (strike price) within a specified period of time as designated by the Exchange in its contract specifications.
Call profit/loss
For a long call, equal to the call value minus the premium. For a short call, equal to the premium minus the call value.
Call value
At expiration, equal to the futures price minus the strike price of the call.
Canceling Order
An order that removes a customer's previous order from the market.
Carrying Charge (Cost of Carry)
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.
Cash price
Current market price of the actual physical commodity. Also called "spot price."
Cash settlement
Final disposition of open positions on the last trading day of a contract month. Occurs in markets where there is no actual delivery.
Charting
The use of graphs and charts in the technical analysis of futures markets to plot trends of price movements, average movements of price, and volume and open interest.
Chartist
One who engages in technical analysis.
Cheapest to deliver
A method to determine which particular cash debt instrument is most profitable to deliver against a futures contract.
Clearing
The procedure through which the Clearing House becomes buyer to each seller of a futures contract, and seller to each buyer, and assumes responsibility for protecting buyers and sellers from financial loss by assuring performance on each contract.
Clearing fee
A fee charged by the exchange for each futures or options contract cleared or delivered on the Exchange. Fees may be waived or reduced for some commodities as specified by the Board of Directors from time to time.
Close
The period at the end of the trading session. Sometimes used to refer to the closing range.
Closing price
The last price of a contract at the end of a trading session.
Closing range
The high and low prices or bids and offers recorded during the period designated by the Exchange as the official close (the final 60 seconds of trading in currencies and 30 seconds in all other contracts).
Commission Fee
A fee charged by a broker for executing a transaction. Also referred to as brokerage fee.
Commitment of Open Interest
When a trader or institution assumes the obligation to accept or make delivery on a futures contract.
Contract close-out
Completion and settlement of the contract, including resolution of all outstanding items.
Contract Grades
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.
Contract month
The month in which futures contracts may be satisfied by making or accepting delivery. Also called the delivery month.
Convergence
A term referring to cash and futures prices tending to come together (i.e., the basis approaches zero) as the futures contract nears expiration.
Coupon
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.
Credit spread
An option spread in which there is a net collection of premium.
Crush Spread
The purchase of soybean futures and the simultaneous sale of soybean oil and meal futures. See Reverse Crush.
Current delivery month
The futures contract which matures and becomes deliverable during the present month.
Customer Margin
Within the futures industry, financial guarantees required of both buyers and sellers of futures contracts and sellers of options contracts to ensure fulfillment of contract obligations.
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Daily trading limits
The maximum price fluctuations permitted a contract during one trading session as set by the Exchange. These exist on certain contracts.
Day trader
A trader who establishes and liquidates positions within one day's trading, ending the day with no established position in the market.
Day trading
Refers to establishing and liquidating the same position or positions within one day's trading, thus ending the day with no established position in the market.
Differentials
Price differences between classes, grades, and delivery locations of various stocks of the same commodity.
Deferred
See "back months."
Delivery
The tender and receipt of an actual commodity or financial instrument in settlement of a futures contract.
Delivery month
See "contract month."
Delivery Points
The locations and facilities designated by a futures exchange where stocks of a commodity may be delivered in fulfillment of a futures contract, under procedures established by the exchange.
Delta
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
Demand
The quantity of a commodity that buyers are willing to purchase from the market at a given price.
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Elliot wave theory
A type of technical analysis that studies price wave sequences.
European-style options
Options that may be exercised only on the option's expiration date.
Exercise
The process of an option holder exchanging it for the underlying futures contract.
Exercise or strike price
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.
Exercise price
The price at which the holder (buyer) may purchase or sell the underlying futures contract. Also called strike price.
Exhaustion gap
A gap in prices near the top or bottom of a price move that signals an abrupt turn in the market.
Expanded Trading Hours
Additional trading hours of specific futures and options contracts at the Chicago Board of Trade that overlap with business hours in other time zones.
Expiration
Corresponds to the expiration date of a contract. The last day on which an option may be exercised into the underlying futures contract.
Expire
Letting the expiration date for an option pass without exercising or offsetting the option.
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Fast market
Term used to define unusually hectic market conditions.
Federal Funds Rate
The rate of interest charged for the use of federal funds.
Feed Ratio
A ratio used to express the relationship of feeding costs to the dollar value of livestock. See Hog/Corn Ratio and Steer/Corn Ratio.
Financial Instrument
There are two basic types: (1) a debt instrument, which is a loan with an agreement to pay back funds with interest; (2) an equity security, which is a share or stock in a company.
First Notice Day
The first day that a notice of intent to deliver a commodity can be made by a clearinghouse to a buyer in fulfillment of a given month's futures contract.
Floor trader
An exchange member who generally trades only his or her own account or for an account controlled by him or her. Also referred to as a local.
Futures
A term used to designate all contracts covering the purchase and sale of financial instruments or physical commodities for future delivery on a commodity futures exchange.
Futures contract
A standardized agreement traded on a futures exchange, to buy or sell a commodity at a specified price at a date in the future. Specifies the commodity, quality, quantity, delivery date and delivery point or cash settlement.
Futures Exchange
A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options on futures contracts.
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Gamma
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.
Gap
A price area at which the market didn't trade from one day to the next.
Gap theory
A type of technical analysis that studies gaps in prices
Give up
An order to be given to another member firm in clearing system, an allocation. An order executed by clearing firm A and given to clearing firm B where it will be cleared and processed.
Gross Domestic Product (GDP)
The value of all final goods and services produced by an economy over a particular time period, normally a year.
Gross National Product (GNP)
Gross Domestic Product plus the income accruing to domestic residents as a result of investments abroad plus less income earned in domestic markets accruing to foreigners abroad.
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Head and shoulders
A sideways price formation at the top or bottom of the market that indicates a major market reversal.
Hedge
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 it involves opposite positions in the cash market and futures market at the same time.
Hedger
A person or firm who uses the futures market to offset price risk when intending to sell or buy the actual commodity.
High
The highest price for a particular futures contract over a specified time period.
High Limit
Absolute top price for a valid order per a given instrument. Any order with a higher price is rejected.
Historical volatility
See "volatility."
Holder
One who purchases an option.
Hog/Corn Ratio
When corn prices are high relative to pork prices, fewer units of corn equal the dollar value of 100 pounds of pork. Conversely, when corn prices are low in relation to pork prices, more units of corn are required to equal the value of 100 pounds of pork.
House
Clearing member or a firm
Hundredweight
100 pounds. Abbreviated cwt.
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In-the-money
A call option with a strike price less than the underlying futures price. A put option with a strike price greater than the underlying futures price.
Index
A number 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.
Initial margin
The minimum performance bond deposit required from customers for each contract in accordance with the rules of the Exchange.
Instrument
Contract to be traded; e.g., GEZ9.
In-the-Money Option
An option with intrinsic value. A call option is in-the-money if its strike price is below the current price of the underlying futures contract. A put option is in-the-money if its strike price is above the current price of the underlying futures contract
Intrinsic value
The relationship of an option's in-the-money strike price to the current futures price. For a put: strike price - futures price. For a call: futures price - strike price.
Introducing broker (IB)
A firm or person engaged in soliciting or accepting and handling orders for the purchase or sale of futures contracts, subject to the rules of a futures exchange, but not in accepting any money or securities to margin any resulting trades or contracts.
Inverted Market
A futures market in which the relationship between two delivery months of the same commodity is abnormal.
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Lagging Indicators
Market indicators showing the general direction of the economy and confirming or denying the trend implied by the leading indicators. Also referred to as concurrent indicators.
Last trading day
Day on which trading ceases for the maturing (current) delivery month.
Lead month
The most current contract month in which delivery may take place. The contract month closest to the current point in time.
Leading Indicators
Market indicators that signal the state of the economy for the coming months. Some of the leading indicators include: average manufacturing workweek, initial claims for unemployment insurance, orders for consumer goods and material, percentage of companies.
Leverage
The use of a small amount of assets to control a greater amount of assets.
Limit
The maximum price advance or decline from the previous day's settlement price permitted in one trading session, as determined by the Exchange.
Limit move
See "maximum price fluctuation."
Limit order
Usually equivalent to "price." An order in which the customer sets a limit on price or other condition, as contrasted with the trading floor definition of a market order, which implies that the order should be filled as soon as possible.
Liquid
A characteristic of a security or commodity market with enough units outstanding to allow large transactions without a substantial change in price.
Liquidate
Selling (or purchasing) futures contracts of the same delivery month purchased (or sold) during an earlier transaction or making (or taking) delivery of the cash commodity represented by the futures contract. See Offset.
Locals
Exchange members who trade for their own account and/or fill orders for customers and whose activities provide market liquidity.
Long
One who has bought a futures or options on futures contract to establish a market position and who has not yet closed out this position through an offsetting procedure.
Long hedge
The purchase of a futures contract in anticipation of an actual purchase in the cash market. Used by processors or exporters as protection against an advance in the cash price. See "hedge."
Long position
A position in which the trader has bought a futures contract that does not offset a previously established short position.
Lot
The term used to describe a designated number of contracts, e.g., a five-lot purchase. Also called "cars."
Low
The lowest price of a specified time period for a particular futures contract.
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Managed Futures
Represents an industry comprised of professional money managers known as commodity trading advisors who manage client assets on a discretionary basis, using global futures markets as an investment medium.
Margin
The amount of money or collateral deposited by a client with his or her broker, or by a clearing member with the Clearing House, for the purpose of insuring the broker or Clearing House against loss on open futures or options contracts.
Margin Call
A call from a clearinghouse to a clearing member, or from a brokerage firm to a customer, to bring margin deposits up to a required minimum level.
Mark-to-market
The daily adjustment of portfolio to reflect profits and losses.
Market order
An order filled immediately at the best price available.
Market segment
A part of a market, that relates to a place, an exchange authority, a type of security (equity / bond / option / future), and a list of securities with a given set of trading methods.
Market value
The current value of all commodities held in a margin account.
Market-if-touched (MIT)
Order type: An MIT order to buy becomes a market order if and when the instrument trades at a specific or lower trigger price; an MIT order to sell becomes a market order if and when the instrument trades at a specified or higher trigger price.
Market-on-close (MOC)
Order type: can be submitted at any time within a trading session, but only executable at closing, at the closing price.
Marketplace
A given location where trading takes place.
Matched trade
The execution of the buy and sell orders that together consummate a trade. A matched trade consists of one or more contracts and occurs when the same price is specified by buy and sell orders, for a specified number of contracts.
Maturity
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.
Maximum price fluctuation
The maximum amount the contract price can change up or down during one trading session, as stipulated by Exchange rules
Minimum price fluctuation
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.
Mnemonic
A short name uniquely representing an instrument (i.e., GEZ0, SPU0P7400).
MO
Designates the "Market by Order" display, which illustrates the entire depth of the market, displaying each bid and offer at every price level.
MOC (market order at closing)
See "market order at closing."
MOO
Market order at opening – a market order entered before an opening, to be executed at the instrument's opening price only.
MOS
Stands for "Mutual Offset System." Designated order to be given to another Exchange (e.g. SGX).
Moving average chart
A chart recording moving averages (three-day, ten-day, etc.) of market prices.
Moving averages
A type of technical analysis using the averages of settlement prices.
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Nearby
The nearest active trading month of a futures or options on futures contract. Also referred to as the lead month.
Nearby (Delivery) Month
The futures contract month closest to expiration. Also referred to as spot month.
Net Liquidation Value
It is your Total Trade Equity plus your Net Option Value. It is the value of your account if you were to liquidate all positions in your account. It is marked-to-market. This information appears on your account statement.
Net Options Value
The credit or debit value of all option positions combined. It is marked-to-market. Market movement may cause bids and offers to be away from the last reported price.
Non-serial options
Options for months for which there are existing futures contracts of the same months.
Notice Day
According to Chicago Board of Trade rules, the second day of the three-day delivery process when the clearing corporation matches the buyer with the oldest reported long position to the delivering seller and notifies both parties. See First Notice Day.
Notional value
The underlying value (face value), normally expressed is U.S. dollars, of the financial instrument or commodity specified in a futures or options contract.
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OCO (order cancels order)
Order type: An order that includes two orders, one of which cancels the other when filled. Also referred to as one-cancels-other.
Offer (or ASK, or sell)
A willingness to sell at a given price; the opposite of bid.
Offset
Selling if one has bought, or buying if one has sold, a futures or options on futures contract.
Open interest
Total number of futures or options on futures contracts that have not yet been offset or fulfilled for delivery
Open Market Operation
The buying and selling of government securities Treasury bills, notes, and bonds by the Federal Reserve.
Open order
An order that remains good until filled, cancelled or eliminated.
See good-til-canceled.
Open outcry
The method of trading publicly so that each trader has a fair chance to buy or sell.
Opening
The beginning of the trading session.
Opening price
The first price of an instrument at the beginning of the trade session.
Opening range
The range of prices at which the first bids and offers were made or first transactions were completed. Must be initiated by at least one trade.
Option
The right, but not the obligation, to sell or buy the underlying (in this case, a futures contract) at a specified price within a specified time.
Option assignment
The random selection of an option writer to take a futures position when an option is exercised.
Option buyer
One who purchases an option and pays a premium.
Option Premium
The price of an option. The sum of money that the option buyer pays and the option seller receives for the rights granted by the option.
Option seller
One who sells an option and receives a premium.
Order
A request – usually passed by a trader to the host – for buying or selling a given instrument at certain conditions more or less defined (conditions being price, quantity, type of order, etc.).
Order type
A property of an order, containing the conditions to which this order must comply for execution (e.g. limit, market, stop).
Out-of-the-money
An option with no intrinsic value. A call option with a strike price greater than the underlying futures price. A put option with a strike price less than the underlying futures price.
Out-trades
A situation that results when there is some confusion or error on a trade – for example, when both traders think they were buying.
Overbought/oversold
A technical opinion of a market which has risen/fallen too much in relation to underlying fundamental factors.
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P&S(Purchase and Sale) Statement
A statement sent by a commission house to a customer, showing the number of contracts bought or sold, 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.
Phase (market)
Sub-unit of a session, where consistent actions take place (e.g. pre-opening, no-cancel, opening, continuous trading, etc.).
Point and Figure Chart
A graph of prices charted with x for price increases and o for price decreases, used by the chartist for buy and sell signals.
Position
A market commitment. A buyer of a futures contract is said to have a long position and, conversely, a seller of futures contracts is said to have a short position. See "Open Interest"
Position Day
The first day in the process of making or taking delivery of the actual commodity on a futures contract. The clearing firm representing the seller notifies the clearinghouse that its short customers want to deliver on a futures contract.
Position Limit
The maximum number of speculative futures contracts one can hold as determined by the Commodity Futures Trading Commission and/or the exchange upon which the contract is traded. Also referred to as trading limit.
Position Trader
A trader who takes a position in the market and might hold that position over a long period of time.
Premium
The amount agreed upon between the buyer and seller for the purchase or sale of a futures option – the buyer pays the premium and the seller receives the premium. The excess of one futures contract price over that of another or over the cash market price.
Price
Price to which the given instrument should be traded – in an order or a trade. Also called "limit."
Price Discovery
The generation of information about "future'' cash market prices through the futures markets.
Price Limit
The maximum advance or decline from the previous day's settlement price permitted for a contract in one trading session by the rules of the exchange. See also Variable Limit, Maximum Price Fluctuation.
Price order
An order to sell or buy at a certain price or better.
Producer Price Index (PPI)
An index that shows the cost of resources needed to produce manufactured goods during the previous month.
Purchasing Hedge (or Long Hedge)
Buying futures contracts to protect against a possible price increase of cash commodities that will be purchased in the future.
Purchasing Power
Total Trade Equity minus Initial Margin. Your purchasing power represents funds available to you to establish new positions. Your purchasing power changes throughout the day as your total trade equity and margins change.
Pure hedger
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.
Put
An option to sell a commodity, security, or futures contract at a specified price at any time between now and the expiration of the option contract.
Put breakeven
See "breakeven."
Put option
An option granting the right, but not the obligation, to sell a futures contract at the stated price prior to the expiration of the option.
Put profit / loss
For a long put, equal to the put value minus the premium. For a short put, equal to the premium minus the put value.
Put value
At expiration, equal to the strike price minus the futures price
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Qualifier
The time for which the order is valid – FAK, Session, FOK, Day, GTC, GTD. Validity field options.
Quantity
Number of instrument units (e.g. lots) to be traded, in order or a trade. Sometimes also called "size."
Quote
An indication of current bids and offers in the market on a particular instrument or spread.
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Rally
An upward movement of prices following a decline. The opposite of a reaction.
Range
The high and low prices or high and low bids and offers recorded during a specified time.
Reaction
A decline in prices following an advance. The opposite of rally.
Reference price
The price of an instrument used as "reference" – e.g., for determining an opening price, starting an algorithm, or figuring into an index – and is usually the settlement price or last closing price.
Registered representative
A person employed by, and soliciting business for, a commission house or futures commission merchant.
Repurchase Agreements (or Repo)
An agreement between a seller and a buyer, usually in U.S. government securities, in which the seller agrees to buy back the security at a later date.
Resistance line
A price level above which prices tend not to rise due to selling pressure.
Reserve Requirements
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.
Resistance
A level above which prices have had difficulty penetrating.
Retracement
A price move in the opposite direction of a recent trend.
Reverse Crush Spread
The sale of soybean futures and the simultaneous purchase of soybean oil and meal futures. See Crush Spread.
Risk
Possibility of suffering loss.
Round-turn
See "commission."
Runaway gap
A gap in prices after a trend has begun that signals the halfway point of a market move.
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Scalp
To trade for small gains. Scalping normally involves establishing and liquidating a position quickly, usually within the same day, hour or even just a few minutes.
Selective hedger
A person who hedges only when he or she believes that prices are likely to move against him or her.
Sell (Sell Order)
An offer. This transaction type indicates to sell or to go short. Opposite of buy or go long.
Selling climax
An extraordinarily high volume occurring suddenly in a downtrend signaling the end of the trend.
Selling Hedge (or Short Hedge)
Selling futures contracts to protect against possible declining prices of commodities that will be sold in the future.
Serial options
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.
Session (market)
For a given class, period of time within which a consistent set of trading actions takes place – usually composed of the following phases: initialization, pre-opening/opening, trading, closing, post-session processing.
Settlement price
A figure determined by the closing range that is used to calculate gains and losses in futures market accounts, performance bond calls and invoice prices for deliveries. See "closing range."
Short
One who has sold a futures contract to establish a market position and who has not yet closed out this position through an offsetting procedure. The opposite of long.
Short cash
Describes a trader who needs and plans to buy a commodity.
Short hedge
The sale of a futures contract in anticipation of a later cash market sale. Used to eliminate or lessen the possible decline in value of ownership of an approximately equal amount of the cash financial instrument or physical commodity. See "hedge."
Short Options Value
The total cost of purchasing back all short options on a marked-to-market basis.
Side
A side counts the buy and the sell as separate events. Each matched trades, and each contract, has two sides — the buyer side and the seller side. Taken together, these two sides equal one round turn per unit of volume.
Sideways trend
Seen in a bar chart when prices tend not to go above or below a certain range of levels.
Simulated Trading
The process of buying and selling without actually entering the market or risk any real funds.
Single-stock futures (SSF)
Futures contracts on individual stocks.
Spread
An options position established by purchasing one option and selling another option of the same class, but of a different series.
Speculator
One who attempts to anticipate price changes and, through buying and selling futures contracts, aims to make profits. Does not use the futures market in connection with the production, processing, marketing or handling of a product.
Spot
Usually refers to a cash market price for a physical commodity that is available for immediate delivery.
Spot month
The nearest trading month which may or may not be the current calendar month. Usually used as the current delivery month for a commodity.
Spot price
See "cash price."
Stop close only order
A stop order that is executed only during the closing range of the trading session.
Stop loss
Order type: Same as stop limit, but with no limit indication: when triggered, will execute like an MBF.
Strike (price)
The price at which the option buyer may purchase or sell the underlying futures contract upon exercise. See "exercise price."
Supply
The quantity of a commodity that producers are willing to provide to the market at a given price.
Support
The place on a chart where the buying of futures contracts is sufficient to halt a price decline.
Symbol
Equivalent to "instrument."
Symmetrical triangles
A price formation that can either signal a reversal or a continuation of price movement.
Synthetic call option
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.
Synthetic futures
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.
Synthetic option
A combination of a futures contract and an option, in which one is bullish and one is bearish.
Synthetic put option
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.
Target price
An expected selling or buying price. For long and short hedges with futures: futures price + expected basis. For puts: futures price - premium + expected basis. For calls: futures price + premium + expected basis.
Theta
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.
Tick
Refers to a change in price, either up or down. See "minimum price fluctuation."
Time and Sales
The registered times of prices traded and bid and offers on a given market.
Time Limit Order
A customer order that designates the time during which it can be executed.
Time Value
The amount by which an option's premium exceeds the intrinsic value of the option. Usually relative to the time left to expiration.
Time Stamped
Part of the order-routing process in which the time of day is stamped on an order.
Total Trade Equity
Cash Balance combined with Open Trade Equity on a marked-to-market basis.
Trade Balance
The difference between the value of a nation's imports and exports of merchandise.
Trader
A member of the exchange who buys and sells futures and options on the floor of the exchange. See "day trader, floor broker and position trader
Trading day
(Should actually be called 'Clearing Day') – Period within which all executed trades for a given class are cleared on the same day. This period may very well exceed 24 hours. One or more sessions could take place.
Trend
The general direction of the market.
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Underlying Futures Contract
The specific futures contract that is bought or sold by exercising an option.
Uptrend
A price trend characterized by a series of higher highs and higher lows.
U.S. Treasury Bill
A short-term U.S. government debt instrument with an original maturity of one year or less. Bills are sold at a discount from par with the interest earned being the difference between the face value received at maturity and the price paid.
U.S. Treasury Bond
Government-debt security with a coupon and original maturity of more than 10 years. Interest is paid semiannually.
U.S. Treasury Note
Government-debt security with a coupon and original maturity of one to 10 years.
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Variable Limit
An expanded allowable price range set during volatile markets.
Vega
The measure of the change in an option's premium for a 1% change in the volatility of the underlying futures contract. Equal to the change in premium divided by 1% change in volatility.
Volatility
An annualized measure of the fluctuation in the price of a futures contract. Historical volatility is the actual measure of futures price movement from the past. Implied volatility is a measure of what the market implies it is, as reflected in the option'
Volume
The number of contracts in futures or options on futures made during a specified period of time. CME: means "aggregated quantity" (e.g. total traded volume of the day).
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With discretion (DISC)
A note on an order telling the floor broker to use his or her own good judgment in filling the order.
Writer
An individual who sells an option.
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Yield
A measure of the annual return on an investment.
Yield Curve
A chart in which the yield level is plotted on the vertical axis and the term to maturity of debt instruments of similar creditworthiness is plotted on the horizontal axis. The yield curve is positive when long-term rates are higher than short-term rates.
Yield to Maturity
The rate of return an investor receives if a fixed-income security is held to maturity.
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Zero Cost Collar
A type of positive-carry collar that secures a return through the purchase of a cap and sale of a floor. Also called "zero cost options" or "equity risk reversals."
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