Futures / Commodities Trading Terminology "A" to "C"

Glossary of Trading Terminology

Jump directly to a definition on this page by clicking on any of these words:
actuals | arbitrage | at-the-market | at-the-money | basis | basis grade | bear | bid | breaking | bulging | bull | buy on close | buy on opening | call | cash commodity | cash delivery | cash market | CFTC | CTA | close | closing price | commission house | cover | cross hedge
actuals: Commodities on hand, ready for shipment, storage and manufacture.
arbitrage: Simultaneous purchase and sale of two different contracts (or a combination of cash and futures) to take advantage of perceived mispricing. In a pure arbitrage, mispricing is locked in and a risk-free profit made through trades.
at-the-market: An order to buy or sell at the best price possible at the time an order reaches the trading pit.
at-the-money: In options, when the strike price equals the price of the underlying futures.
basis: The difference between the price of a futures contract and the underlying commodity's spot (or cash) price.
basis grade: Specified grade, or grades. named in the exchange's futures contract. Other grades deliverable are subject to price differentials from the basis or "contract" grade.
bear: A market trending downward, or a person who expects prices to go lower.
bid: A bid, subject to immediate acceptance, made on the floor of exchange to buy a definite number of futures contracts at a specified price.
breaking: A quick decline In price.
bulging: A quick increase In price.
bull: A market trending upward; on a person who expects prices to go higher.
buy on close: To buy at the end of the trading session at a price within the closing range.
buy on opening: To buy at the beginning of a trading session at a price within the opening range.
call: An option that gives the buyer the right to a long position in the underlying futures at a specific price; the call writer (seller) may be assigned a short position in the underlying futures if the buyer exercises the call.
cash commodity: The actual physical product on which a futures contract is based. This product can include agricultural commodities, financial instruments and the cash equivalents of index futures.
cash delivery: (see delivery)
cash market: Markets where trading is taking place for spot (immediate or near immediate) delivery as opposed to future delivery.
CFTC: Commodity Futures Trading Commission
CTA: Commodity Trading Advisor
close: The period at the end of the trading session officially designated by the exchange during which all transactions are considered made "at the close."
closing price
(or range)
: The price (or price range) recorded during the period designated by the exchange as the official close.
commission house: A concern that buys and sells actual commodities or futures contracts for the accounts of customers.
cover: The cancellation of a short position in any futures contract by the purchase of an equal quantity of the same futures contract (see liquidation).
cross hedge: When a cash commodity is hedged by using futures contracts based on another commodity.

Lt Crude 48.14
Nat Gas 3.081
Corn 356 2/8
Cotton #2 77.47
Gold 1243.3
Copper 2.6395
Euro 1.08425
USD Index 99.442
SP500 E-mini 2342.75
DJIA E-mini 20575
close_icon
open_icon