|
|
 |
   |
|
|
 Arbitrage: The simultaneous buying and selling of a security at two different prices in two different markets resulting in profits without risk. Perfectly efficient markets present no arbitrage opportunities. Perfectly efficient markets seldom exist. Bear market: A market in which prices are declining. Bid: The price that the market participants are willing to pay. 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. Broker: A firm or person engaged in executing orders to buy or sell futures contracts for customers. A full service broker offers market information and advice to assist the customer in trading. A discount broker simply executes orders for customers. Bull market: A market in which prices are rising. 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. Close: The period at the end of the trading session. Sometimes used to refer to the closing range. Commission: For a futures contract, the one-time fee charged by a broker to cover the trades you make to open and close each position, payable when you exit the position. Also called round-turn. Commodities: Goods such as grains, silver and other precious metals, and minerals traded in large amounts on a commodities exchange. Contract: Unit of trading for a financial or commodity future. Also, actual bilateral agreement between the parties (buyer and seller) of a futures or options on futures transaction as defined by an exchange. 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. Demand: The quantity of a commodity that buyers are willing to purchase from the market at a given price. Derivative: A financial contract whose value is based on, or "derived" from, a traditional security (such as a stock or bond), an asset (such as a commodity), or a market index. Downtrend: A price trend characterized by a series of lower highs and lower lows. Floor broker: An exchange member who is paid a fee for executing orders for clearing members or their customers. A floor broker executing orders must be licensed by the Commodity Futures Trading Commission (CFTC). 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 futures exchange. 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. Leverage: The use of a small amount of assets to control a greater amount of assets. Liquidation: Any transaction that offsets or closes out a long or short futures or options on futures position. by processors or exporters as protection against an advance in the cash price. Lot: The term used to describe a designated number of contracts, e.g., a five-lot purchase. Market order: An order filled immediately at the best price available. Open outcry: The method of trading publicly so that each trader has a fair chance to buy or sell. Option: The right, but not the obligation, to sell or buy the underlying contract (in this case, a futures contract) at a specified price within a specified time. Put: A put option is a contract that gives the buyer the right, but not the obligation, to sell the stock or futures contract underlying the contract at a predetermined price (the strike price). The seller (or writer) of the put option is obligated to buy the stock or future at the strike price. Put options can be exercised at any time before the option expires. You buy a put if you think the share price of the underlying stock will fall, or sell one if you think it will rise. You don't have to own the stock to buy a put. You can buy a put, wait for the price to fall below the strike price, then buy the stock and immediately resell it for the higher strike price. The person who sold the put gets stuck with buying the stock at the higher price. Range: The high and low prices or high and low bids and offers recorded during a specified time. 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. The speculator has no interest in taking delivery. Spread: The price difference between two contracts. Holding a long and a short position in two related futures or options on futures contracts, with the objective of profiting from a changing price relationship. Supply: The quantity of a commodity that producers are willing to provide to the market at a given price. Trader: A member of the exchange who buys and sells futures and options on the floor of the exchange. Trend: The general direction of the market. Volatility: A 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's price. Volume: The number of transactions in futures or options on futures made during a specified period of time. |
|
|
|
||
|
|
|
 |
||