Glossary

Booking the Basis

See Also:

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.

Buyer: Buyer is a market participant (trader/investor) who takes a long futures position or buys an option. An option buyer is also called a taker, holder, or owner.

Cash Price: cash Price is the price in the marketplace for actual cash or spot commodities to be delivered via customary market channels.

CIF: CIF is the cost, insurance, and freight paid to a point of destination and included in the price quoted.

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.

Quotation: Quotation is the actual price or the bid or ask price of either cash commodities or futures or options contracts at a particular time.

Range: Range is the difference between the high and low price of a commodity, futures, or option contract during a given period (trading session, week, month, year, etc).

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