Allowances: Allowances is the discounts (premiums) allowed for grades or locations of a commodity lower (higher) than the par (or basis) grade or location specified in the futures contract. See Differentials.
Basis: Basis is the difference between the current cash price of a commodity and the futures price of the same commodity. In more details, the Basis is the difference between the spot or cash price of a commodity and the price of the nearest futures contract for the same or a related commodity. Basis is usually computed in relation to the futures contract next to expire and may reflect different time periods, product forms, grades, or locations.
Basis Grade: Basis Grade is the grade of a commodity used as the standard or par grade of a futures contract.
CIF: CIF is the cost, insurance, and freight paid to a point of destination and included in the price quoted.
Commodity: A commodity, as defined in the Commodity Exchange Act, includes the agricultural commodities enumerated in Section 1a(4) of the Commodity Exchange Act, 7 USC 1a(4), and all other goods and articles, except onions as provided in Public Law 85-839 (7 USC 13-1), a 1958 law that banned futures trading in onions, and all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in.
Discount: Discount is the amount a price would be reduced to purchase a commodity of lesser grade. Discount is sometimes used to refer to the price differences between futures of different delivery months, as in the phrase "July is trading at a discount to May," indicating that the price of the July future is lower than that of May. Discount could be applied to cash grain prices that are below the futures price.
Futures: Futures (also called Futures Contract) is a legally binding agreement to buy or sell a commodity or financial instrument at a later date. Futures contracts are normally standardized according to the quality, quantity, delivery time and location for each commodity, with price as the only variable.
Grades: Grades term refers to the various qualities of a commodity.
High: High is the highest price of the day for a particular futures or options on futures contract.
Location: Location is a Delivery Point for a futures contract.
Par: Par refers to the standard delivery point(s) and/or quality of a commodity that is deliverable on a futures contract at contract price. Serves as a benchmark upon which to base discounts or premiums for varying quality and delivery locations. Par in bond markets refers to an index (usually 100) representing the face value of a bond.
Premium: Premium is the price (payment) paid by the buyer of an option to an options seller. Options premium is received by the seller of an option (by options writer), In futures market Premium is the cash prices that are above the futures price. At the same time term "Premium" may refer to the amount a price would be increased to purchase a better quality commodity. In some cases Premium stands for a futures delivery month selling at a higher price than another.
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Naked options trading is very risky - many people lose money trading them. It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options.