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Definition of Futures contract
Agreement to buy or sell a set number of shares of a specific stock in a designated future
Exchange-traded promise to buy or sell an asset in the future at a prespecified price.
A contract in which the seller agrees to provide something to a buyer at a specified future date at an agreed price.
A constant, set by an exchange, which when multiplied by the futures price gives
When several futures contracts are considered, the contract settling last.
When several futures contracts are considered, the contract with the closest
The contract settling immediately after the nearby futures contract.
The physical commodity underlying a futures contract. Cash commodity, physical.
A promise to sell an asset before the seller has lined up purchase of the asset. This
Regarding a futures contract, the difference between the cash price and the futures price observed in the
An option that gives the right to buy the underlying futures contract.
The actual physical commodity, as distinguished from a futures contract.
The provision of some futures contracts that requires not delivery of underlying assets but
futures contracts, such as stock index futures, that settle for cash, not involving
The acceptable Treasury security with the highest implied repo rate; the rate that a
A trader is said to have a commitment when he assumes the obligation to accept or make
A commodity is food, metal, or another physical substance that investors buy or sell, usually via
The month in which futures contracts may be satisfied by making or accepting a delivery.
The movement of the price of a futures contract toward the price of the underlying cash
Rules set by the Chicago Board of Trade for determining the invoice price of each
The practice of hedging with a futures contract that is different from the underlying being
The most distant months of a futures contract. A bond that sells at a discount and does not
The tender and receipt of an actual commodity or financial instrument in settlement of a futures contract.
The options available to the seller of an interest rate futures contract, including the quality
Those points designated by futures exchanges at which the financial instrument or
The price fixed by the Clearing house at which deliveries on futures are in invoiced; also the
The equilibrium price for futures contracts. Also called the theoretical futures price, which equals
Futures commission merchant
A firm or person engaged in soliciting or accepting and handling orders for
An option on a futures contract. Related: options on physicals.
The price at which the parties to a futures contract agree to transact on the settlement date.
Implied repo rate
The rate that a seller of a futures contract can earn by buying an issue and then delivering
Initial margin requirement
When buying securities on margin, the proportion of the total market value of
The price that the buyer of a futures contract must pay the seller when a Treasury Bond is delivered.
Last trading day
The final day under an exchange's rules during which trading may take place in a particular
The purchase of a futures contract(s) in anticipation of actual purchases in the cash market. Used
An arrangement whereby the profits or losses on a futures contract are settled each day.
Options on physicals
Interest rate options written on fixed-income securities, as opposed to those written on
A specific area of the trading floor that is designed for the trading of commodities, individual futures, or
An option granting the right to sell the underlying futures contract. Opposite of a call.
Also called the swap option, the seller's choice of deliverables in Treasury Bond and Treasury
Security deposit (initial)
Synonymous with the term margin. A cash amount of funds that must be deposited
The sale of a futures contract(s) to eliminate or lessen the possible decline in value ownership of
The nearest delivery month on a futures contract.
Refers to the buyer's actually assuming possession from the seller of the asset agreed upon
For a Treasury Bond or note futures contract, the seller's choice of when in the delivery month to deliver.
Trading of a stock, bond, option or futures contract can be halted by an exchange while news is
Triple witching hour
The four times a year that the S&P futures contract expires at the same time as the S&P
Wild card option
The right of the seller of a Treasury Bond futures contract to give notice of intent to deliver
A guaranteed investment contract purchased with a single (one-shot) premium. Related:
A contract accounting method that recognizes contract revenue
Conditional sales contracts
Similar to equipment trust certificates except that the lender is either the
A term of reference describing a unit of trading for a financial or commodity future. Also, the actual
A formal written statement of the rights and obligations of each party to a transaction.
Method of accounting for sales or service agreements where completion
an external party that has been granted an outsourcing contract to produce a part or component for an entity
an external party that has been granted an
Contract Work Hours and Safety Standards Act
A federal Act requiring federal contractors to pay overtime for hours worked exceeding 40 per week.
a contract in which the customer agrees
A guaranteed investment contract where the credit rating is tied to some variable
A cash market transaction in which delivery of the commodity is deferred until after the
Agreement to buy or sell an asset in the future at an agreed price.
Forward forward contract
In Eurocurrencies, a contract under which a deposit of fixed maturity is agreed to
A term used to designate all contracts covering the sale of financial instruments or physical
A market in which contracts for future delivery of a commodity or a security are bought or sold.
Guaranteed insurance contract
A contract promising a stated nominal interest rate over some specific time
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
A contract that obligates a purchaser of a project's output to make cash
An unwritten understanding between two groups, such as an understanding between an employer and employees that employees will receive a stable wage despite business cycle activity.
London International Financial Futures Exchange (LIFFE)
A London exchange where Eurodollar futures
London International Financial Futures Exchange (LIFFE)
London exchange where Eurodollar futures as well as futures-style options are traded.
McNamara-O'Hara Service Contract Act of 1965
A federal Act requiring federal contractors to pay those employees working on a federal contract at
National Futures Association (NFA)
The futures industry self regulatory organization established in 1982.
Nexus (of contracts)
A set or collection of something.
contracts which have been bought or sold without the transaction having been completed by
The contract that balances the three types of agency costs (contracting, monitoring, and
A contract that, in exchange for the option price, gives the option buyer the right, but not
Options contract multiple
A constant, set at $100, which when multiplied by the cash index value gives the
Set of contracts perspective
View of corporation as a set of contracting relationships, among individuals
Spot futures parity theorem
Describes the theoretically correct relationship between spot and futures prices.
A contract that obligates the purchaser to take any product that is offered to it (and pay
Theoretical futures price
Also called the fair price, the equilibrium futures price.
Turnkey construction contract
A type of construction contract under which the construction firm is
Walsh-Healey Public Contracts Act of 1936
A federal Act that forces government contractors to comply with the government’s minimum wage and hour rules.
A guaranteed investment contract purchased with deposits over some future designated
A firm which buys and sells future contracts for customer accounts. Related: futures
contracts such as options and futures whose price is derived from the price of the
First notice day
The first day, varying by contracts and exchanges, on which notices of intent to deliver
A strategy designed to reduce investment risk using call options, put options, short selling, or futures
A put option that has a strike price higher than the underlying futures price, or a call option
1) Amount paid for a bond above the par value.
1) The gap between bid and ask prices of a stock or other security.
Stock replacement strategy
A strategy for enhancing a portfolio's return, employed when the futures
Liquidating an existing position and simultaneously reinstating a position in another futures
If the average maturity of a bank's liabilities is less than that of its assets, it is said to be
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