A cash contract definition refers to an agreement between two parties to buy or sell a specified asset at a predetermined price on a future date. The asset can be anything from gold and silver to corn and wheat. The price is set at the time of the contract and is usually based on the … Read more
The delivery option is the right, but not the obligation, to have a futures contract delivered and settled for physical commodities. The delivery option is also commonly referred to as the “physical delivery” option. The delivery option is typically only available on certain types of commodities, such as agricultural products, metals, and energy products. When … Read more
A futures spread is the difference in the price of two related futures contracts. For example, the price of oil futures may be different in two different months. A futures spread allows traders to bet on the direction of the price difference between the two contracts. If the trader believes the price of oil will … Read more
The last trading day is the last day that a particular contract can be traded. After the last trading day, the contract expires and is no longer valid. The last trading day is usually two days before the expiration date, but this can vary depending on the contract. Why do markets expire on Thursdays? Markets … Read more
The carrying charge market is the market in which participants trade contracts for the right to take delivery of a commodity at a future date, and in which the commodity is paid for upfront. This market is also sometimes referred to as the forward market or the futures market. In the carrying charge market, participants … Read more
In futures and commodities trading, actuals refers to the physical commodities that are being traded. These are the underlying assets that are being bought and sold in the market, as opposed to paper assets such as futures contracts. Actuals can also refer to the actual prices of commodities, as opposed to the prices of futures … Read more
A warehouse receipt is a document that proves that a certain amount of a commodity has been stored in a warehouse. This document can be used as a form of collateral in futures and commodities trading. What are commodities? A commodity is a physical good that is standardized across producers and can be traded on … Read more
The Chicago Mercantile Exchange (CME) is the largest futures exchange in the United States. Chicago Mercantile Exchange (CME) trades futures contracts on a wide variety of products, including metals, energies, Treasury bonds, and currencies. It is a leading provider of market data and research on these products. The CME is a member of the CME … Read more
Documentary collections are a type of trade finance in which a seller arranges for the collection of payment from the buyer through a bank. The buyer instructs their bank to make payment to the seller’s bank, which in turn forwards the funds to the seller. The main benefit of documentary collections is that they provide … Read more
In the futures market, “full carry” refers to the total cost of holding a position in a futures contract, including interest costs, storage costs, and any other associated costs. This is in contrast to “net carry”, which only includes interest costs. For example, if you are long a futures contract for wheat, the full carry … Read more
