Glossary

Hedging

See Also:

Cash Market: Cash Market is a place where people buy and sell the actual commodities (i.e., grain elevator, bank, etc.). The market for the cash commodity (as contrasted to a futures contract) taking the form of:
1) an organized, self-regulated central market (e.g., a commodity exchange);
2) a decentralized over-the-counter market;
3) a local organization, such as a grain elevator or meat processor, which provides a market for a small region.

Contract: Contract is a term of reference describing a unit of trading for a commodity future or option. At the same time contract is an agreement to buy or sell a specified commodity, detailing the amount and grade of the product and the date on which the contract will mature and become deliverable.

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.

Futures Contract: Futures Contract is an agreement to purchase or sell a commodity for delivery in the future: (1) at a price that is determined at initiation of the contract; (2) that obligates each party to the contract to fulfill the contract at the specified price; (3) that is used to assume or shift price risk; and (4) that may be satisfied by delivery or offset.

Long: Long Futures trader is a trader who has bought futures contracts or options on futures contracts or owns a cash commodity. Long position (long trading) is opposite to Short position (Short trading).

Mini: Mini (e-Mini) refers to a futures contract that has a smaller contract size than an otherwise identical futures contract.

Short: Short (shorting) is the selling side of an open futures contract.

Transaction: Transaction is an entry or liquidation of a trade.

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