How Do Futures and Options Compare?
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Terms, expressions and abbreviations used when trading financial products are explained below. A buy or sell trade that instructs the broker that the entire order needs to be filled.
For example, if there difference between forward and future option trading 40 tonnes being offered, and you want to buy 50 tonnes, the broker will have to wait until there are 50 tonnes offered to fill the trade. Lowest price any seller is willing to accept per tonne for a given period of time. Ask price could also be referred to as the offer price or selling price.
A transaction whose price is the same as the prevailing market price of the relevant underlying at the time of trading. An option where the exercise price is equal or very close to the current market price of the underlying — the forward price. This option has no intrinsic value. Benchmarks tend to be indices but can be any collection of securities and weights. To be considered a legitimate benchmark, the collection has to be knowable in advance and transparent.
The opposite of Contango. A general downward movement in a market over a sustained period of time. Highest price that any buyer is willing to pay per tonne at any given period. Bid price could also be referred to as give price or buying price. Normally the more liquid the product, the smaller the spread. A general upward movement in a market over a sustained period of time. Call Option — Asian: A contract that entitles the holder buyer to receive the positive difference between the exercise price and the spot price.
Compare with Put option. A Clearing House becomes the counterparty for both the seller and the buyer in a trade. This helps to reduce the market risk for trading firms. A derivative derives its difference between forward and future option trading from the price or level of an underlying asset or measurement, such as a bond, loan, equity, currency, commodity, index, published interest rate or a combination of the above.
The regulation introduces requirements for OTC derivatives transactions which meet the eligibility criteria to be cleared through central counterparties and all OTC derivatives transactions to be reported to trade repositories.
The exercise Price in an option also called strike price is the price at which the option value in the contract will be set at the time of settlement. The difference between the Exercise price and the spot price difference between forward and future option trading the value of the Option.
The day on which an Option is subject to expiry for cash settlement. A trade that has been completely executed- i. A buy or sell trade that instructs the broker to either fill the entire order immediately or cancel the trade.
A binding offer to buy or sell by a Trade Member. A Firm order is tradable without further confirmations.
Financial contract with cash settlement between two named and identified Trade Members with counterparty credit risk.
Cleared financial contract where a clearinghouse acts as central counterpart in all contracts guaranteeing the settlement. Good For the Day: Market or Limit order that remains active only until the end of the trading session.
Market or Limit order that remains active until the trade is cancelled or the trade gets filled. A trading strategy which is designed to reduce or mitigate risk. A second transaction is entered into to offset the risk of the first.
A measure of price fluctuation over time. It uses historical daily, weekly, monthly, quarterly and yearly price data to empirically measure the volatility of a market or instrument in the past. Volatility implied by the market price of the option based on an option pricing model. A position which has intrinsic value, for example a portfolio acquired at a rate which difference between forward and future option trading more advantageous than current market rates. A single number calculated from the total value of a basket of prices, example Fish Pool Index.
A buy order that instructs a broker to only buy at or below a specified price, or a sell order that instructs a broker to only sell at or above a specified price. This type of order insures that you never pay more than you intend, or conversely sell for less than you want.
The National Association of Securities Dealers Automated Quotations, more commonly known as Nasdaq, is an all electronic exchange, which accounts for some of the highest trading volume in the world. Many technology companies choose to list on the Nasdaq. The sum of money or value of securities required to be transferred and maintained, in order to provide protection to the recipient of margin against default by a counterparty to a trade. Nasdaq demands margin set as cash.
Regulatory framework which aims to provide uniform regulations across the European Economic Area EEA for the financial and investment services sector. The uniform regulations facilitate the freedom of movement for goods, services and capital across the difference between forward and future option trading countries in exchange for adhering to the European Union laws and policies.
An Asian option at Fish Pool is a contract traded in which the payoff is based on the difference between the exercise difference between forward and future option trading and the monthly settlement price.
The writer of an option receives a premium from the buyer holder. Either a Call gives payoff at higher spot prices or a Put gives payoff at lower spot prices.
Also known as Option Grantor or Option Seller. A position which has no intrinsic value, for example a call option with a strike price higher than the future price. Financial contracts or other instruments between two counterparties where the terms of such transaction are freely negotiated, as distinct from an exchange-traded transaction where the size, tenor and other terms are prescribed by the rules of the relevant exchange.
A trade that has not been completely executed- i. A method for difference between forward and future option trading margin requirements that evaluates positions as a group or portfolio and takes into account the potential for losses on some positions to be offset by gains on others.
The margin requirement for a portfolio is typically set equal to an estimate of the largest possible decline in the net value of the portfolio that could occur under assumed changes in market conditions. Sometimes referred to as risk-based margining. Price agreed between the option holder and option writer when entering into an option. An option holder shall pay and the option writer shall receive the option premium. Electronic trading done before the start of regular market hours.
Put Option — Asian: A contract that entitles the holder buyer to receive the positive difference between the spot price and the exercise price. Compare with Call Option. The process whereby the difference between the contracted price and spot price multiplied with the traded volume for the month is cash settled with buyer and seller.
The price quoted difference between forward and future option trading at commodity with immediate delivery, at Fish Pool, the weekly spot price defined as the Fish Pool Index. An order placed with a broker to buy or sell a particular underlying at the market price, if and when the price reaches a specified level.
The price at which an underlying of an Option contract may be bought or sold. Abbreviation on exchanges to easily look up securities. The risk of future, measured by its daily price movements.
In finance, volatility, standard deviation, and risk are all synonymous. The British ton also difference between forward and future option trading in other countries that have the Imperial system of weights and measures is equal to 2, pounds or 1, To be considered a legitimate benchmark, the collection has to be knowable in advance and transparent Backwardation: An index fund which is traded on the stock market.
The details of the trade that was executed- i. A Firm order is tradable without further confirmations Forward: Fund that attempts to closely mirror the performance of an index. A market with a high level of trading activity.