GlossaryThe Striker Online Glossary is a list of terms and concepts used in futures trading. This glossary continues to grow and we encourage you to visit if there are new terms or concepts you are unfamiliar with. In addition, you may contact one of our experienced brokers at 800-920-5808 for questions on trading terms, concepts or information.
See call option.
Publicly traded contract granting the owner the right, but not the obligation, to buy a specific amount of foreign currency or other financial instrument at a specified price at a stated future date. The buyer of a call option acquires the right but not the obligation to purchase a particular market at a stated price on or before a particular date.
Call option position delta's
The sum of the delta amounts of call options bought and written for each currency.
A member of a commodity exchange, usually a clearinghouse member, through whom other brokers or customers, clear all or some trades.
Carrying Charge (Cost To Carry)
For physical commodities such as grains and metals, the cost of storage space, insurance, and finance charges incurred by holding a physical commodity. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost necessary to buy the instrument. (See Basis)
The actual commodity or financial instrument as opposed to a futures contract based upon the commodity or instrument. See also Actuals.
The underlying commodity, security, currency or money market in which transactions for the purchase and sale of cash instruments which futures and derivative contracts relate to, are carried out.
The price of the actual underlying commodity that a futures contracts is based upon. In the case of SSF, the price of the underlying stock.
The Chicago Board Options Exchange. The CBOE has markets in Equities, Options and Over-the-counter securities.
The Chicago Board of Trade.
The Commodities Futures Trading Commission
The difference between the current price and the previous day's close or settlement price.
Chicago Board of Trade (CBOT or CBT)
The oldest futures exchange in the United States; established in 1848. The exchange lists agricultural commodity futures such as corn, oats and soybeans, in addition to financial instruments, e.g., Treasury Bond, Treasury Notes.
Chicago Board Options Exchange
An exchange by the Chicago Board of Trade to trade stock options.
Excessive trading of the customer’s account by a broker, who has control over the trading decisions for the account, to make more commissions while disregarding the best interest of the customer. This violates the NASD, CFTC, and NFA rules.
The formal completion of a trade.
The procedure through which trades are checked for accuracy. Once the trades are validated, the clearinghouse or association becomes the buyer to each seller and the seller to each buyer.
A member of a clearinghouse or an association. All trades of a non-clearing member must be registered and eventually settled through a clearing member.
An organization with which securities may be deposited for safe- keeping and through which the purchase and sale transactions may be realized. The two main systems in the Eurobond market are Cedel and Euroclear.
See Settlement Price.
An agency connected with exchanges through which all transactions are made, offset, or fulfilled through delivery of the actual cash market and through which financial settlement is made; often, is a fully chartered separate corporation rather than a division of the exchange proper.
The period at the end of a trading session during which all transactions are considered to be made at the close.
The balance of entries posted to the account at the close of the statement period.
The price at which transactions are made just before the close on a given day. A number of transactions are often made at this time and they will be included over a range of prices. See also closing range.
A range of closely related prices at which transactions took place at the closing of the market; buy and sell orders at the closing might have been filled at any point within such a range.
An acronym for Chicago Mercantile Exchange. Also operates the International Monetary Market (IMM), the Index and Options Market (IOM) and the Growth and Emerging Markets (GEM)..
(1) A fee charged by a broker to a customer for performance of a specific duty, such as the buying or selling of futures contracts. Banks charge commissions for issuing letters of credit, accepting drafts drawn under letters of credit, entering foreign exchange transactions for their customers, custodial services, acting as fiscal agent, etc. Fees are paid by banks to others for various services and include fees to foreign exchange brokers for arranging foreign exchange transactions. A commission must be fair and reasonable, considering all the relevant factors of the transaction. (2) Sometimes used to refer to the Commodity Futures Trading Commission (CFTC).
A member of an exchange who executes orders for the sale or purchase of financial futures contracts.
Commission Merchant (Futures Commission Merchant)
One who makes a trade, either for another member of the exchange or for a non-member client, in his or her own name and becomes liable as principal to the other party to the transaction.
An entity of trade or commerce, services, or rights in which contracts for future delivery may be traded. Some of the contracts currently traded are wheat, corn, cotton, livestock, copper, gold, silver, oil, propane, plywood, currencies, Treasury Bills, Treasury Bonds, and Stock Indexes.
Commodity Exchange Act (CEA)
The federal act that provides for federal regulation of futures trading. CEA is administered by the Commodity Future Trading Commission.
Commodity Exchange of New York (CMX)
A division of the New York Mercantile Exchange.
Commodity Futures Trading Commission (CFTC)
The federal agency established by the Commodity Futures Trading Commission Act of 1974 to ensure the open and efficient operation of the futures markets. The five futures markets commissioners are appointed by the President (subject to Senate approval).
An enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts and/or options on futures. Not the same as a joint account.
Commodity Pool Operator (CPO)
An individual or organization which operates or solicits funds for a commodity pool. Generally required to be registered with the Commodity Futures Trading Commission.
Commodity Trading Advisor (CTA)
Individuals or firms that, for a fee, issue analysis or reports concerning commodities, provide advice to others trading commodity futures, options, or leverage contracts.
The department within a brokerage firm that oversees the trading and market-making activities of the firm. It ensures that the employees and officers of the firm are abiding by the rules and regulations of the SEC, CFTC, NASD, and NFA exchanges and Designated Supervisory Regulatory Organizations (SROs).
A narrower range than prior periods.
A statement sent by a commission house to a customer when a transaction is made. The statement confirms the number of contracts bought or sold and the prices at which the contracts were bought or sold.
A technical analysis term. A pause in trading activity in which price moves sideways, setting the stage for the next move. Traders are said to evaluate their positions during periods of consolidation.
Consumer Price Index (CPI)
A measure of price changes in consumer goods and services used to identify periods of inflation or deflation. The index is based on a list of specific goods and services purchased in urban areas. It is released monthly by the Labor Department.
(1) An agreement between at least two parties to buy or sell on certain conditions, a certain product, as a result of which a legal status concerning rights and duties of the parties exists. (2) A term of reference describing a unit of trading for a commodity.
Standards or grades of commodities listed in the rules of the exchanges which must be met when delivering cash commodities against futures contracts. Grades are often accompanied by a schedule of discounts and premiums allowable for delivery of commodities of lesser or greater quality than the contract grade.
A board of trade designated by the Commodity Futures Trading Commission to trade futures or option contracts on a particular commodity. Commonly used to mean any exchange on which futures are traded. See also Board of Trade and Exchange.
The month in which deliveries to be made in accordance with a futures contract.
The action of offsetting a futures securities or other financial instrument transaction with an equal and opposite transaction. Short covering - is a purchase to offset an earlier sale of an equal number of the same delivery month. Liquidation - is the sale to offset the obligation to take delivery.
The hedging of a cash instrument on a different, but related, futures or other derivatives market.
A procedure for margining related securities, options, and futures contracts jointly when different clearing houses clear each side of the position.
Commodity Trading Advisor.
Cup and Handle
A pattern on bar charts. The pattern can be as short as seven weeks and as long as 65 weeks. The cup is in the shape of a U. And the handle has a slight downward drift. The right hand side of the pattern has low trading volume. As the stock comes up to test the old highs. The stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price trade sideways with a tendency towards a downtrend for 4 days to 4 weeks, then it takes off.
Publicly traded contract involving the sale or purchase of a standardized amount of foreign currency at a price with delivery at a stated future date.
Publicly traded contract giving the owner the right, but not the obligation, to sell or buy a standardized amount of foreign currency at a price at a stated future date (see also call option; put option)
Current Delivery (Month)
The futures contracts which will come to maturity and become deliverable during the current month; also called “spot month”.