Glossary

Speculative Position Limit

See Also:

Position: Position is a commitment, either long or short, in the market, in the form of one or more open contracts..

Position Limit: Position Limit is the maximum number of speculative futures contracts one can hold as determined by the Commodity Futures Trading Commission (CFTC) and/or the exchange where the contract is traded.

CFTC: CFTC abbreviation stands for the Commodity Futures Trading Commission which is the federal regulatory agency established in 1974 that administers the Commodity Exchange Act. The CFTC monitors the futures and options on futures markets in the United States.

Commission: Commission is a fee charged by a broker or brokerage house (company) to a customer (trader) for executing a transaction. In the future market commission is
1) The charge made by a futures commission merchant for buying and selling futures contracts;
2) the fee charged by a futures broker for the execution of an order. Note: when capitalized, the word Commission usually refers to the CFTC.

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.

Commodity Futures Trading Commission: Commodity Futures Trading Commission (CFTC) is the federal regulatory agency established in 1974 that administers the Commodity Exchange Act. The CFTC monitors the futures and options on futures markets in the United States.

Exchange: A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options contracts or securities. Exchanges include designated contract markets and derivatives transaction execution facilities.

Hedge Exemption: Hedge Exemption is an exemption from speculative position limits for bona fide hedgers and certain other persons who meet the requirements of exchange and Commodity Futures Trading Commission (CFTC) rules.

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).

Option: Option is a contract that gives the buyer the right, but not the obligation, to buy or sell a specified quantity of a commodity or other instrument at a specific price within a specified period of time, regardless of the market price of that instrument. There are two types of options: Put Options and Call Options.

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

Labels: