Glossary

Street Book

See Also:

Clearing Member: Clearing member is a member of an exchange clearinghouse responsible for the financial commitments of its customers (a member of clearing organisation). All trades of a non-clearing member must be registered, processed and eventually settled through a clearing member.

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.

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.

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.

Strike Price: Strike Price (Exercise Price) is the price, specified in the option contract, at which the underlying futures contract, security, or commodity will move from seller to buyer. Strike Price is the price at which the buyer of a call (put) option may choose to exercise his right to purchase (sell) the underlying futures contract.

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

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