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actuals
An actual physical commodity someone is buying or selling, e.g., soybeans, corn, gold, silver, Treasury bonds, etc.
adjusted futures price
The cash-price equivalent reflected in the current futures price. This is calculated by taking the futures price times the conversion factor for the particular financial instrument (e.g., bond or note) being delivered.
against actuals
A transaction generally used by two hedgers who want to exchange futures for cash positions. Also referred to as "Exchange for Physicals" (EFP) or "versus cash".
Allocation Claim System (ACS)
CME's electronic give-up system. ACS allows executing firms to give-up (allocate) trades at the execution price to the designated carrying firms(s), utilizing their current trade entry systems and CME's Trade Management System. ACS may be utilized for trades executed and given up to a single firm, as well as trades given up to multiple firms (see Give-up System).
american-style option
Type of option contract that can be exercised at the buyer's discretion on any trading day up to and including the expiration date. This differs from a European style option, which may only be exercised on its expiration date.
all or none (AON)
An order type, if the order can execute in total, then it executes. Otherwise it stays in the order book until it can execute in total.
application program interface (API)
The specific method prescribed by a computer operating system or by an application program by which a programmer writing an application program can communicate with the operating system or another application.
Application Service Provider (ASP)
Application service provider (ASP); a company that offers individuals and firms access via the Internet to applications and related services that would otherwise have to be located in their personal computers.
approved delivery facility
Any bank, depository, stockyard, mill, warehouse, plant or elevator authorized by the Exchange for delivery of Exchange contracts.
approved warehouse
Any warehouse which has been officially approved by the exchange and from which actual deliveries of commodities may be made on futures contracts.
arbitrage
The simultaneous purchase of cash, futures, or options in one market against the sale of cash, futures or options in a different market in order to profit from a price disparity.
ask price
Also called the "offer." Indicates a willingness to sell a futures or options on futures contract at a given price.
as-of trade
An unmatched trade from a previous day that is resubmitted to the CME clearing system; trade is submitted "as of" the original trade date.
assignment (options)
The process by which the CME clearing house, in response to a long exercising its option, randomly selects a seller to fulfill its obligation to buy or sell the underlying futures contract at its strike price. The assigned seller of a put must buy the underlying futures contract; the assigned seller of a call must sell the underlying futures contract.
assignments (delivery)
The process by which the CME clearing house selects the long position to accept delivery on a contract for which a seller has submitted a delivery notice.
Associated Person (AP)
A person, commonly called a commodity broker, associated with and soliciting customers and orders for a futures commission merchant or introducing broker. The AP must pass a Series 3 examination, be licensed by the Commodity Futures Trading Commission and be a member of the National Futures Association.
At-the-money
An option with a strike price equal to the underlying futures price.
Automated trading system (ATS)
Automated trading system (ATS); a trading method in which a computer makes decisions and enters orders without a person entering those orders. This is a programmatic way of representing the trader.
average daily volume
Volume for a specified time period divided by the number of business days within that same time period.
Average Price System (APS)
CME Rule 553 enables clearing firms, in defined circumstances, to confirm average prices when multiple prices are received on the execution of an order or a series of orders ("series averaging") during a single trading session. The APS is the vehicle through which the exchange computes an average price. Firms then allocate such trades (at the average price) to the carrying firm(s) or may sub-allocate those trades to customer accounts on their books.
average temperature
The average of a day's high and low temperatures, from midnight to midnight.
backbone
Network used to interconnect several networks together.
back months
The futures or options on futures contracts being traded that are further from expiration that the current or "front month" contract. Also called deferred or distant months.
backspreads
Selling one or more at-the-money options and buying a larger number of out-of-the-money options. Backspreads may generate trading profits if implied volatility increases and/or the underlying instrument's price moves sufficiently in the anticipated direction.
balance of trade
The difference between a country's imports and exports.
bar chart
A graph of prices, volume and open interest for a specified time period used by the chartist to forecast market trends. For example, a daily bar chart plots each trading session's open, high, low and settlement prices.
basis
The difference between the spot or cash price and the futures price of the same or a related commodity. Basis is usually computed to the near future, and may represent different time periods, product forms, qualities and locations. The local cash market price minus the price of the nearby futures contract is equal to the basis.
basis point
One-hundredth (.01) of a full index point or percentage.
bear
One who believes prices will move lower.
bear market
A market in which prices are declining.
bear spread (options)
A vertical spread involving the sale of the lower strike call and the purchase of the higher strike call, called a bear call spread. Also, a vertical spread involving the sale of the lower strike put and the purchase of the higher strike put, called a bear put spread.
bear spread (Futures)
In most commodities and financial instruments, the term refers to selling the nearby contract month, and buying the deferred contract, to profit from a change in the price relationship.
beta
A measure of an asset's return in relation to an underlying factor or index; e.g. the relationship between the movement of an individual stock or a portfolio and that of the overall stock market.
bid price
An offer to buy a specific quantity of a commodity at a stated price or the price that the market participants are willing to pay.
bid/ask spread
The price difference between the bid and offer price.
block trade
A privately negotiated futures transaction executed apart from public auction market, either on or off the exchange trading floor. There are minimum order size requirements that vary according to product and order type, and eligibility for engaging in such trades is strictly regulated. Block Trades can only be negotiated with futures, options on futures, and CBOT swap trades (excludes all other basis trades).
blowoff volume
An extraordinarily high volume trading session occurring suddenly in an uptrend, possibly signaling the end of the trend.
bond
Instrument traded on the cash market representing a debt a government entity or of a company.
breakaway gap
A chart pattern described by gap in prices that may signal the end of a price pattern and the beginning of an important market move.
breakeven
The point at which an option buyer or seller experiences no loss and no profit on an option. Call breakeven equals the strike price plus the premium; put breakeven equals the strike price minus the premium.
Bretton Woods Agreement of 1944
An agreement that established fixed-rate trading bands for the world's major foreign currencies. The agreement also provided for central bank currency market intervention and tied the price of the U.S. dollar to gold at $35 per ounce. The agreement collapsed in 1971, when President Nixon devalued the dollar and allowed the major currencies to "float" on the world market.
broad based index future
Refers to a futures contract based upon an index that is not considered narrow-based as defined in Section 1a(25) of the Commodity Exchange Act (CEA). Also referred to as a Non-Narrow Based Index Future.
brokerage
The fee paid to a broker for executing orders. May be a flat amount or a percentage; also referred to as a commission.
brokerage house
A firm that handles orders to buy and sell futures and options contracts for customers.
bull
One who expects prices to rise.
bull market
A market in which prices are rising.
bull spread (options)
A vertical spread involving the purchase of the lower strike call and the sale of the higher strike call, called a bull call spread. Also, a vertical spread involving the purchase of the lower strike put and the sale of the higher strike put, called a bull put spread.
bull spread (futures)
In most commodities and financial instruments, the term refers to buying the nearby month, and selling the deferred month, to profit from the change in the price relationship.
bundle
The simultaneous sale or purchase of one each of a series of consecutive futures contracts. Bundles provide a readily available, widely accepted method for executing multiple futures contracts with a single transaction.
butterfly options spread
A three-legged option spread in which each leg has the same expiration date but different strike prices.
butterfly spread
The placing of two inter-delivery spreads in opposite directions with the center delivery month common to both spreads.
by-laws
The By-Laws of CME unless otherwise specified.
cabinet price
Nominal price for liquidating deep-out-of-the-money options contracts. Defined as the lowest possible tradable price for this option, and is determined within the Clearing System. Trades on options done at a price equal to zero are considered cabinet trades.
cabinet trade (cab)
A trade that allows options traders to execute deep out of the money options by trading the option at a price less than the minimum tick (based on the minimal allowable tick convention).
calendar spread (futures)
Also called a intra-commodity spread. The simultaneous purchase and sale of the same futures contract, but different contract months. (i.e., buying a September CME S&P 500® futures contract and selling a December CME S&P 500 futures contract).
calendar spread (options)
The simultaneous purchase and sale of options on futures contracts of the same strike price, but different expiration dates.
call option
A contract between a buyer and seller in which the buyer pays a premium and acquires the right, but not the obligation, to purchase a specified futures contract at the strike price on or prior to expiration. The seller receives a premium and is obligated to deliver, or sell, the futures contract at the specified strike price should a buyer elect to exercise the option. Also see American Style Option and European Style Option.
car
A contract or unit of trading. Originally, one contract, or "car," was the quantity of a commodity that would fill a railroad car. See also lot.
carrying charge
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 of funds necessary to buy the instrument. Also referred to as cost of carry.
carrying firm
A firm that carries on its books positions that were executed by it or by another firm.
carryover
Last year's ending stocks of a storable commodity.
cash commodity
The actual or physical commodity, as distinguished from a futures contract.
cash for futures
See Exchange For Physicals.
cash market
A place where people buy and sell the actual commodities, i.e., grain elevator, bank, etc. Spot usually refers to a cash market price for a physical commodity that is available for immediate delivery. A forward contract is a cash contract in which a seller agrees to deliver a specific cash commodity to a buyer sometime in the future. Forward contracts, in contrast to futures contracts, are privately negotiated and are not standardized.
cash price
Current market price of the actual or physical commodity. Also called the spot price.
cash sales
The sale of commodities in local cash markets such as elevators, terminals, packing houses and auction markets.
cash settlement
A settlement method used in certain future and option contracts where, upon expiration or exercise, the buyer does not receive the underlying commodity but the associated cash position. For buyers not wishing to take actual possession of the underlying physical commodity, cash settlement is sometimes a more convenient method of transacting business. For example, the purchaser of an E-mini S&P future is unable to take ownership of the index at expiration. Therefore he simply pays or receives the difference between the purchase price and the price of S&P futures contract at settlement.
central bank
A government bank that regulates a country's banks and manages a nation's monetary policy. The Federal Reserve is the central bank in the United States, whereas the European Central Bank (ECB) is the central bank of the European Monetary Union.
certificate of incorporation
The Certificate of Incorporation of CME Group (formerly Chicago Mercantile Exchange Inc.) unless otherwise specified.
Chicago Board of Trade (CBOT)
Acronym for the Board of Trade of the City of Chicago, Inc. On July 9, 2007, the Chicago Mercantile Exchange Holdings Inc. and Chicago Board of Trade Holdings, Inc. completed the merger of their companies, creating the world's largest and most diverse exchange, CME Group.
Chicago Mercantile Exchange (CME)
Acronym for the CHICAGO MERCANTILE EXCHANGE INC. On July 9, 2007, Chicago Mercantile Exchange Holdings Inc. and Chicago Board of Trade Holdings, Inc. completed the merger of their companies, creating the world's largest and most diverse exchange now known as CME Group A CME/Chicago Board of Trade Company.
clearing
The procedure through which CME Clearing House becomes the buyer to each seller of a futures contract, and the seller to each buyer, and assumes responsibility for protecting buyers and sellers from financial loss by ensuring buyer and seller performance on each contract. This is effected through the clearing process, in which transactions are matched, confirming that both the buyer's and the seller's trade information are in agreement.
clearing fee
A fee charged by the exchange for each contract cleared. There are also clearing fees associated with deliveries, creation of a futures position resulting from an option exercise or assignment, Exchange for Physicals (EFP), block trades, transfer trades and adjustments.
clearing firm
A firm approved to clear trades through CME Clearing House. Memberships in clearing organizations are usually held by companies. Clearing members are responsible for the financial commitments of customers that clear through their firm.
clearing house
An agency or separate corporation of a futures exchange that is responsible for settling trading accounts, collecting and maintaining margin monies, regulating delivery and reporting trade data (i.e., CME Clearing is the clearing house for CME).
clearing ID
The alpha-numeric firm ID under which the firm's trades will clear.
clearing member
A firm approved to clear trades through CME Clearing House. Memberships in clearing organizations are usually held by companies. Clearing members are responsible for the financial commitments of customers that clear through their firm.
clearing non-trade transaction
Composed of transfers, exchange-for-physicals (EFPs), blocks and give-ups. Transfers, blocks and EFPs are privately negotiated, ex-pit transactions, while give-ups relate to post-trade processing. "Cancels" and "replaces" do not generate clearing non-trade transactions.
clearing trade transaction
Each matched trade between a buyer and a seller generates two clearing trade transactions: one for the buyer and one for the seller.
clerk
A member's bona fide employee who has been registered by the exchange to work on the trading floor.
close
The period at the end of the trading session officially designated by the exchange during which all transactions are considered "made at the close." Sometimes used to refer to the closing range.
closing bell
Any signal which indicates the conclusion of normal daily trading hours in any commodity.
closing price
The last price of a contract at the end of a trading session.
closing range
The high and low prices, or bids and offers recorded during the period designated by the exchange as the official close of trading in a given pit (the final 60 seconds of trading in currencies and 30 seconds in all other contracts).
cme clearing
The division of the exchange through which trades are cleared, settled, and guaranteed.
CME clearing house
The division of CME Group that confirms, clears and settles all CME Group trades. CME Clearing also collects and maintains performance bond funds, regulates delivery and reports trading data.
CME Division
The Chicago Mercantile Exchange Division of the exchange. Holders of the membership interest associated with Chicago Mercantile Exchange Holdings Inc. Class B-1 Stock, who have been elected to membership, are members of the CME Division.
CME Globex
The first global electronic trading system for futures and options has evolved to become the world's premier marketplace for derivatives trading. With continual enhancements, the platform has effectively enabled CME, already known for innovation, to transform itself into a leading high-tech, global financial derivatives exchange.
CME Globex order duration qualifiers
CME Globex allows orders to be placed for various different durations. An order entered into the CME Globex system that does not contain an order duration qualifier will be canceled if it is not filled during the trading day in which it was received or, if it was received between trading days, during the next trading day. Current order durations qualifiers are: Day/Session, Good 'Till Canceled (GTC), Good 'Till Date (GTD), Fill or Kill (FOK) and Fill and Kill (FAK).
CME Globex order types
The CME Globex platform supports a broad array of order functionality, offering convenience and flexibility to meet a variety of individual trading needs. The availability of specific order types varies based on the markets, products and trading applications.
CME Globex user ID
An identifier assigned to access the CME Globex electronic trading engine.
CME Group
A combined entity formed by the 2007 merger of the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT). We provide the widest range of benchmark futures and options products available on any exchange, covering all major asset classes.
commission
The one time fee charged by a broker to a customer when the customer executes a futures or option on futures trade through the brokerage firm.
commodity
In reference to futures trading, the underlying instrument upon which a futures contract is based. This may be a financial instrument (for example foreign currencies or Eurodollar time deposits) as well as an actual good or product.
commodity code
A unique symbol used to identify a particular commodity traded on CME for purposes of submitting data into the Clearing System. This code should not be confused with the ticker symbol, which is the code denoting which commodity price is being quoted.
Commodity Credit Corp
A Government-owned and operated entity that was created to stabilize, support, and protect farm income and prices. CCC also helps maintain balanced and adequate supplies of agricultural commodities and aids in their orderly distribution.
commodity exchange
An exchange that lists designated futures contracts for the trading of various types of derivative products and allows use of its facilities by traders. Must comply with rules set forth by the Commodity Futures Trading Commission (CFTC).
Commodity Futures Modernization Act of 2000 (CFMA)
Commodity Futures Modernization Act of 2000.
Commodity Futures Trading commission (CFTC)
Acronym for the Commodity Futures Trading Commission as created by the Commodity Futures Trading Commission Act of 1974. This government agency regulates the nation's commodity futures industry.
commodity pool
An enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts or commodity options.
commodity pool operator (CPO)
An individual or organization that operates or solicits funds for a commodity pool.
commodity trading advisor (CTA)
A person or entity who, for compensation or profit, directly or indirectly advises others as to the value or the advisability of buying or selling futures contracts or commodity options. Advising indirectly includes exercising trading authority over a customer's account as well as providing recommendations through written publications or other media.
common currency
Currency that is eliminated when calculating a cross rate between two currencies when their exchange rates are expressed in terms of the common currency; normally the US dollar.
Consumer Price Index (CPI)
A measuring the average price of consumer goods and services purchased by U.S. households. It is one of several price indices calculated by national statistical agencies. The percent change in the CPI is a measure of inflation. The CPI can be used to index (i.e., adjust for the effects of inflation) wages, salaries, pensions, or regulated or contracted prices.
contract
An agreement to buy or sell an exchange specified amount of a particular commodity or financial instrument at a specified price. Also, a term of reference describing a unit of trading for a commodity future, as in "5 Lean Hog contracts". The contract specifications detail the amount and grade of the product and the date on which the contract will mature and become deliverable and then expire.
contract grades
The standard grades of commodities or instruments listed in the rules of the exchanges that 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 standard called for by the exchange.
contract month/year
The month and year in which a given contract becomes deliverable which are specified in the contract specifications. Also known as the delivery month.
contract size
The actual amount of a commodity represented in a futures or options contract as specified in the contract specifications.
controlled account
Any account for which trading is directed by someone other than the owner. Also called a Managed Account or a Discretionary Account.
convergence
A term referring to cash and futures prices tending to come together (i.e., the basis approaches zero) as the futures contract nears expiration.
cooling degree day (CDD)
A day in which the average daily temperature is more than 65 degrees Fahrenheit, and therefore likely to be a day in which people turn on their air conditioning. A Cooling Degree Day is assigned a value that represents the number of degrees that day's average temperature exceeds 65 degrees. For example, if a day's average temperature is 85 degrees, the CDD value for that day would be 20 (85 - 65). If the average temperature is less than or equal to 65 degrees, the CDD value for the day would be zero. (The day would not be sufficiently warm enough to require air conditioning.)
cost of 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 of funds necessary to buy the instrument. Also referred to as carrying charge.
country risk
Risk associated with an FX (foreign exchange) transaction, referring to potential political or economic instability.
coupon
The interest rate on a debt instrument expressed in terms of a percent on an annualized basis that the issuer guarantees to pay the holder until maturity.
covered call
Position where a call option is sold in concert with a long position in the futures contract.
crack spread
A specific spread trade involving simultaneously buying and selling contracts in crude oil and one or more derivative products, typically gasoline and heating oil. Oil refineries may trade a crack spread to hedge the price risk of their operations, while speculators attempt to profit from a change in the oil/gasoline price differential.
credit spread
An option spread in which there is a net collection of premium.
crop (marketing) year
The time span from harvest to harvest for agricultural commodities. The crop marketing year varies slightly with each ag commodity, but it tends to begin at harvest and end before the next year's harvest, e.g., the marketing year for soybeans begins September 1 and ends August 31. The futures contract month of November represents the first major new-crop marketing month, and the contract month of July represents the last major old-crop marketing month for soybeans.
crop reports
Reports compiled by the U.S. Department of Agriculture on various ag commodities that are released throughout the year. Information in the reports includes estimates on planted acreage, yield, and expected production, as well as comparisons to production from previous years.
cross hedging
Hedging a cash commodity using a different but related futures contract when there is no futures contract for the cash commodity being hedged and the cash and futures markets follow similar price trends (e.g., using soybean meal futures to hedge fish meal).
cross margining
The process of allowing for a reduction in performance bond (margin) requirements. This reduction is possible because risk is reduced when offsetting positions are cleared by the same or affiliated clearing members.
cross rate
The exchange rate between two currencies, in which the home country's currency is not included. In the U.S., the Euro/Yen rate would be considered a cross rate, while in Europe or Japan it would be considered a primary pair.
cross trading
Matching of the buying order of one customer against the selling order of another, a practice that is permissible only when executed as required by CME Rule 533, CFTC Regulations and CME Rulebook.
crush spread
In the soybean futures market, the simultaneous purchase of soybean futures and the sale of soybean meal and soybean oil futures to establish a processing margin.
cumulative degree day
The sum of the daily Heating Degree Day (HDD) or Cooling Degree Day (CDD) values over a specified period, usually a month or a season. This value would also be the number recorded in that month's or season's HDD or CDD Index value.
currency risk
The potential for a shift in exchange rates, which would be detrimental to a trader's position.
current yield
A term used frequently in bond transactions. Current yield is computed by dividing the annual amount of interest by the price paid for the bond or security. If the security is purchased at a discount from the par or principal value, the current yield with be higher than the stated interest or coupon rate.
customer
A designation that refers to segregated clearing member firm trading activity. Customer trading activity and funds may not be combined with non-segregated house activity within a clearing member firm.
customer type indicator (CTI)
Customer Type Indicator (as it pertains to electronic trading systems): A clearing indicator, required at the time of order entry, which indicates for whom the order is being entered: CTI 1 = Applies to orders entered by a workstation user for his/her own account or an account in which he/she has financial interest. CTI 2 = Applies to orders entered for the proprietary account of the clearing firm. CTI 3 = Applies to orders entered by a member, an ETH permit holder, or by an employee of a member or ETH permit holder, for the account of another member or ETH permit holder (Rule 574.B.) CTI 4 = Applies to all other orders that do not fit the above three categories.
daily trading limits
The maximum price range permitted a contract during one trading session. Trading limits are set by the exchange for certain contracts.
day order
An order to buy or sell a contract during that trading day only. Session/Day orders that have been placed but not executed during regular trading hours (RTH) do not carry over to the next trade date. Similarly, Session/Day orders placed during electronic trading hours (ETH) are only executed for that trade date
day trading
Establishing a position or multiple positions and then offsetting them within the same day, ending the day with no established position in the market.
debit spread
An option spread in which there is a net payout of premium.
default
Failure to perform on a contract as required by exchange rules, such as the failure to meet settlement variation, a performance bond call, or to make or take delivery.
deferred
See "back months".
degree day
Term created to assess and acknowledge expected demand for energy. A degree day value is the difference between a day's average temperature and a previously set temperature (in the U.S., 65 degrees Fahrenheit). Degree days above 65 degrees are called Cooling Degree Days because they are days when people are likely to use energy for air conditioning. Heating Degree Days refer to days when people are likely to use energy for heating.
deliverable grades
The standard grades of commodities or instruments listed in the rules of the exchanges that 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 standard called for by the exchange. Also referred to as contract grades.
delivery
The transfer of the cash commodity from a seller of a futures contract to the buyer of a futures contract. Each futures exchange has specific policies and procedures for delivery of a cash commodity. Some futures contracts, such as stock index futures, are cash settled.
delivery day
The calendar date on which a delivery transaction is to be completed.
delivery month
See "contract month."
delivery month performance bond requirement
Performance bond requirements applicable to all positions in the delivery month as defined by the CME clearing house.
delivery notice
The notice that the seller presents to the CME clearing house stating his intention to make delivery against an open short futures position. This notice is separate and distinct from the warehouse receipt or other instruments that will be used to transfer title during the actual delivery.
delivery point
Those locations designated by the exchange at which actual commodities may be delivered in fulfillment of a futures contract.
delta
The measure of the price-change relationship between an option and the underlying futures price. Equal to the change in premium divided by the change in futures price.
demand
The quantity of a commodity that buyers are willing to purchase in the market at a given price.
depository or warehouse receipt
A document issued by a bank, warehouse or other depository indicating ownership of a stored commodity.
depreciation
Decline in the value of one currency relative to another. Occurs when, because of a change in exchange rates, a unit of one currency buys fewer units of another currency.
derivative
A financial instrument whose value is based upon other financial instruments, such as a stock index, interest rates or commodity indexes.
devaluation (of currency)
A government's reduction of the value of its currency, generally through an official announcement.
deviation
A noticeable or marked departure from the norm, plan, standard, procedure, or variable being reviewed. Similar to variance.
differentials
Price differences between classes, grades, and delivery locations of various stocks of the same commodity.
direct quote
Price of a foreign currency in terms of a country's domestic currency.
discount
(1) The amount a price would be reduced to purchase a commodity of lesser grade; (2) sometimes used to refer to the price difference between futures of different delivery months, as in the phrase "July is trading at a discount to May", indicating that the price of the July futures contract is lower than that of May; (3) applied to cash grain prices that are below the futures price.
discount broker
See "broker."
discount method
A method of paying interest by issuing a security at less than par and repaying par value at maturity. The difference between the higher par value and the lower purchase price is the interest.
discount rate
The interest rate that an eligible depository institution is charged to borrow short-term funds directly from a Federal Reserve Bank.
discretionary account
An arrangement by which the holder of the account gives written power of attorney to another person, often his broker, to make trading decisions. Also known as a controlled or managed account.
double top, bottom
A chart formation that signals a possible price trend reversal.
early out trade call
A notice issued by the exchange requiring firms, brokers, and out trade clerks to be available at a specified time on the Trading Floor to resolve out trades in a particular commodity. Fines are issued against those firms who fail to comply.
econometrics
The application of statistical and mathematical methods in the field of economics to test and quantify economic theories and the solutions to economic problems
electronic trading
Computerized system for placing orders, bid and offer posting, and trade execution. The CME Globex platform is an example of an electronic trading system.
ETH session (electronic trading hours)
The trading session during which the CME Globex system is used. Contact the CME Globex Control Center (GCC) for the current schedule of trading hours.
ending stocks
The amount of a storable commodity remaining at the end of a year.
EOS Trader (Enhanced Options System)
CME EOS trader is a web-based front-end system that offers access to advanced options trading functionality on the CME Globex platform in all product groups. CME EOS Trader makes trading CME Options electronically easier than ever. Connect over the internet. Enjoy direct access through CME Globex, virtually 24 hours a day. Get unsurpassed liquidity and transparency. And take advantage of enhanced functionality not available on the legacy CITRIX System.
equilibrium price
The price at which the quantity demanded of a commodity is equal to the quantity supplied.
equity
(1) Instrument traded on the cash market representing a share in the capital of a company; (2) The net value of a commodity account as determined by combining the ledger balance with an unrealized gain or loss in open positions as marked to the market.
eurodollars
U.S. dollars on deposit with a bank outside of the United States and, consequently, outside the jurisdiction of the United States. The bank could be either a foreign bank or a subsidiary of a U.S. bank.
euribor (euro interbank offered rate)
The average interest rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank.
European central bank
The European Monetary Union's central bank, which governs monetary policy for member countries.
European style option
Type of option contract which can only be exercised on expiration date.
European terms
A method of quoting exchange rates, which measures the amount of foreign currency needed to buy one U.S. dollar, i.e., foreign currency unit per dollar. Reciprocal of European Terms is another method of quoting exchange rates, which measures the U.S. dollar value of one foreign currency unit, i.e., U.S. dollars per foreign units.
excess margin
The dollar amount by which the equity exceeds the margin requirements in a performance bond account.
exchange
A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options on futures contracts. See futures Exchange.
exchange basis facility (EBF) trade
An Exchange-for-Physical (EFP) trade transacted in the context of interest rate contracts (see definition of Exchange-for-Physical).
exchange for physicals
An ex pit transaction in which traders may initiate or liquidate their positions by arranging for the simultaneous purchase or sale of the actual cash commodity pursuant to CME Rule 538 or 719.Example: One party buys the cash market currency and sells a CME FX futures contract, while the opposing party sells the cash currency and buys the CME FX futures contract.
exchange traded funds
Shares issued by financial institutions that allow participants to trade benchmark indexes like a stock.
exercise
To invoke the right granted under the terms of an options contract to buy or sell the underlying futures contract. The option holder (long) is the one who exercises the option. Call holders exercise the right to buy the underlying future, while put holders exercise the right to sell the underlying future. The short option holder is assigned a position opposite to that of the option buyer. CME Clearing removes the option and creates the futures positions on the firms' books on the day of exercise.
exercise notice
A notice tendered by a brokerage firm informing the CME clearing house that the holder of the option would like to exchange their option for the underlying futures contract.
exercise or strike price
The price at which the buyer of a call can purchase the commodity during the life of the option, and the price at which the buyer of a put can sell the commodity during the life of the option.
exhaustion gap
A chart pattern described by gap in prices near the top or bottom of a price move that may signal an abrupt turn in the market.
expiration
The last day of trading for a futures contract. The last day on which an option may be exercised and exchanged for the underlying contract.
ex pit transaction
Trades made outside the trading pit. There are two types of valid ex pit transactions: 1. An exchange of cash for futures (exchange for physicals) involving the simultaneous purchase of cash commodities in exchange for a futures contract, at a price difference mutually agreed upon.2. A transfer trade involving the transfer of a customer's account between brokerage firms. Ex-pit transactions are not guaranteed by the CME Clearing until the initial settlement is met.
extrinsic value
The amount of money option buyers are willing to pay for an option in the anticipation that, over time, a change in the underlying futures price will cause the option to increase in value. In general, an option premium is the sum of time value and intrinsic value. Any amount by which an option premium exceeds the option's intrinsic value can be considered time value.
fast market
Term used to define unusually hectic market conditions.
FCM
See "Futures Commission Merchant"
federal funds
In the United States, federal funds are bank reserves at the Federal Reserve. Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear financial transactions. Transactions in the federal funds market enable depository institutions with reserve balances in excess of reserve requirements to lend reserves to institutions with reserve deficiencies. These loans are usually made for 1 day only, i.e. "overnight." The interest rate at which the funds are lent is called the federal funds rate.
federal funds rate
The rate of interest charged for the use of federal funds. See federal funds.
Federal Reserve System(Fed)
The central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act, it is a quasi-public (part private, part government) banking system composed of (1) the presidentially-appointed Board of Governors of the Federal Reserve System in Washington, D.C.; (2) the Federal Open Market Committee; (3) 12 regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the U.S. Treasury. The current Federal Reserve Chairman is Dr. Ben S. Bernanke.
feed ratio
A ratio used to express the relationship of feeding costs to the dollar value of livestock. Steer/Corn Ratio. The relationship of cattle prices to feeding costs.
fill-and-kill-order (FAK)
A FAK order is immediately filled in whole or in part at the specified price. Any remaining quantity is eliminated.
fill-or-kill-order (FOK)
FOK orders are canceled if not immediately filled for the total quantity at the specified price or better.
Financial Information eXchange (FIX) API
An Application Program Interface (API) utilizing the propocol developed for international real-time information exchange designed to allow firms and Independent Software Vendors (ISVs) to easily integrate their order entry and routing systems with CME. It is a software library of functions that enables a member's order management system to communicate with exchange order routing systems. Member firms can run the CME FIX API on their computers to electronically send orders to and receive fills from the CME Globex platform or from the firm's exchange floor operations.
firm number
A three digit numeric code used in CME's Clearing System to identify a clearing firm.
firmsoft
FirmSoft is a browser-based order management tool that provides real-time visibility into working and filled orders, across multiple firm IDs, in the CME Globex® order management database. FirmSoft provides important alternative access to working and filled orders during system failures.
first notice day
The first day on which a notice of intent to deliver a commodity in fulfillment of a futures contract can be made by the clearinghouse to a buyer. The clearinghouse also informs the sellers who they have been matched up with
Financial Information Exchange (FIX)
An electronic communications protocol developed to provide a uniform method of exchanging real-time infomation specifically related to financial transactions.
FIX user ID
The client application's logon ID for the CME FIX servers. The server authenticates this ID during the logon process. Only the assigned user ID may be used to logon to the CME FIX server. Examples: 00100A, 80502B. Assignee: support and QA team.
flat
Market slang to indicate that all open positions have been offset and an account has no exposure to market risk. The three common ways to describe a trader's position in the market are long, short or flat.
flex option
Non-standard option in which the buyer and seller can agree to terms where the strike price may exceed the eligible range of standard strikes, the expiration date can be any business date other than the standard expiration date, or the option can be defined to expire as "American" or "European" style and the option can have any listed futures as its underlying.
floor broker
A professional who is registered with the CFTC to execute orders on the floor of an exchange for the account of another. They receive a fee for doing so from clearing members or their customers.
floor trader
An individual who is registered with the CFTC to execute trades on the floor of an exchange for his own account (or for an account he controls). Also referred to as a local.
foreign exchange
See FX
Foreign Exchange Market (FX)
The exchange of one currency for another. Markets exist in over-the-counter, forward and FX Futures where buyers and sellers conduct foreign exchange transactions. CME® FX futures offer financial institutions, investment managers, corporations and private investors ways manage the risks associated with currency rate fluctuation and to take advantage of profit opportunities stemming from changes in currency rates.
forward contract
A private, cash-market agreement between a buyer and seller for the future delivery of a commodity at an agreed price. In contrast to futures contracts, forward contracts are not standardized and not transferable.
forward points
A metric that can be employed to calculate forward exchange rates. , Forward Points express the premium or discount for the base currency in terms of the quote currency. Forward Points are a function of the spot exchange rate, interest rates, and time. Forward points are added to the spot rate to obtain the forward rate.
full carrying charge market
A futures market where the price difference between delivery months reflects the total costs of interest, insurance, and storage.
full-service-broker
See "broker."
fundamental analysis
The study of supply and demand information to aid in anticipating futures price trends.
fungibility
Futures contracts capable of mutual substitution the interchangeability of contracts. For example, five E-mini S&P 500 contracts are fungible and able to offset one standard-sized S&P 500 contract.
futures
Standardized contracts for the purchase and sale of financial instruments or physical commodities for future delivery on a regulated commodity futures exchange.
futures commission merchant (FCM)
An individual or organization which solicits or accepts orders to buy or sell futures or options contracts and accepts money or other assets from customers in connection with such orders. Each FCM must be registered with the Commodity Futures Trading Commission.
futures contract
A legally binding agreement to buy or sell a commodity or financial instrument at a later date. Futures contracts are standardized according to the quality, quantity and delivery time and location for each commodity.
futures exchange
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. CME Group including all its divisions.
GALAX-C
CME hand-held trading terminals.
gamma
The measure of the change in an option's delta given a change in the futures price. Equal to the change in delta divided by the change in futures price.
gap
A price area at which the market didn't trade from one day to the next. See breakaway gap, exhaustion gap, and runaway gap. >
gap theory
A type of technical analysis that studies gaps in prices.
give up
An order to be given to another member firm in clearing system, an allocation. An order executed by clearing firm A and given to clearing firm B where it will be cleared and processed. Give-up order indicator of "GU" is populated in F-Ex field.
give-up system
ACS (Allocation Claim System) is the CME's electronic give-up system. ACS allows executing firms to give-up (allocate) trades at the execution price to the designated carrying firms(s), utilizing their current trade entry systems and CME's Trade Management System. ACS may be utilized for trades executed and given up to a single firm, as well as trades given up to multiple firms.
Globex
See CME Globex
Globex Control Center (GCC)
CME Globex Control Center, the exchange department that supports and maintains CME's electronic trading system.The CME® Globex® Control Center (GCC) can assist registered CME Globex contacts in canceling orders during emergency situations, when an order cannot be canceled through ordinary means
GLOBEX trading hours
Those hours designated by the Board of Directors for trading through GLOBEX for particular contracts.
GLOBEX user ID
An identifier assigned to access the GLOBEX electronic trading engine.
good-til-canceled (GTC)
Also known as an open order a GTC order, in the absence of a specific limiting designation, will remain in force during RTH and ETH until executed, canceled or the contract expires.
good-till-date (GTD)
GTD orders remain in force during RTH and ETH through the specified date unless executed or canceled.
grades
Standards set for the quality of a commodity.
grading certificates
Certificates that verify the quality of a commodity.
grain terminal
Large grain elevator facility with the capacity to ship grain by rail and/or barge to domestic or foreign markets.
grantor
A seller of an option. See also Writer.
Gross Domestic Product
One of the ways of measuring the size of the economy. GDP is defined as the total market value of all final goods and services produced within a country in a given period of time (usually a calendar year).
gross margining
A method by which a clearing firm's customer margins are based on the firm's positions and applicable submitted spreads. For example, if a firm had only two accounts for two customers in its customer origin and one of those accounts had three open long positions and the other had two open short positions, the firm's margin would be based on five open positions if the firm did not submit spreads (rather than one net long position).
gross position
The sum of a clearing firm's current open positions in a given contract.
gross processing margin
Refers to the difference between the cost of a commodity and the combined sales income of the finished products which result from processing the commodity. Various industries have formulas to express the relationship of raw material costs to sales income from finished products. One example would be the difference between the cost of soybeans and the combined sales income of the processed soybean oil and meal.
haircut
In determining whether assets meet capital requirements, a percentage reduction in the stated value of assets. In computing the worth of assets deposited as performance bond, a reduction from market value.
head and shoulders
A sideways price formation at the top or bottom of the market that may indicate a major market reversal.
heating degree day (HDD)
A day in which the average daily temperature is less than 65 degrees Fahrenheit, and therefore likely to be a day in which people turn on their heat. A heating degree day is assigned a value that represents the number of degrees that days average temperature is less than 65 degrees. For example, if a day's average temperature is 45 degrees, the Heating Degree Day (HDD) value for that day would be 20 (65-45). If the average temperature is greater than or equal to 65 degrees, the HDD value for the day would be zero. (The day would not be sufficiently cold to require heating.)
hedge
The purchase or sale of a futures contract as a temporary substitute for a cash market transaction to be made at a later date. Usually involves simultaneous, opposite positions in the cash market and futures market.
hedger
An individual or firm who uses the futures market to offset price risk when intending to sell or buy the actual commodity. See pure hedger, selective hedger.
hedging
(1) Taking a position in a futures market opposite to a position held in the cash market to minimize the risk of financial loss from an adverse price change; (2) A purchase or sale of futures as a temporary substitute for a cash transaction which will occur later. See long hedge and short hedge.
hedging line of credit
Financing received from a lender for the purpose of hedging the sale and purchase of commodities.
hidden quantity
Order qualifier: indicates that the total quantity will not be displayed to the market, but only per increments as indicated. Difference between order quantity and displayed quantity is hidden.
high
The highest price of the day for a particular futures contract.
historical volatility
The volatility of a financial instrument based on historical returns. This phrase is used particularly when it is wished to distinguish between the actual volatility of an instrument in the past, and the current volatility implied by the market.
hog/corn ratio
The relationship of feeding costs to the dollar value of hogs. It is measured by dividing the price of hogs ($/hundredweight) by the price of corn ($/bushel). When corn prices are high relative to pork prices, fewer units of corn equal the dollar value of 100 pounds of pork. Conversely, when corn prices are low in relation to pork prices, more units of corn are required to equal the value of 100 pounds of pork. A ratio used to express the relationship of feeding costs to the dollar value of livestock.
holder
One who purchases an option (also called the buyer).
holiday
Any day declared to be a holiday by these rules or by a resolution of the Board. The following days are declared holidays on which the Exchange shall be closed: New Year's Day, Washington's Birthday or President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Whenever said holiday falls on a weekend the Board may declare either the preceding or following business day as a holiday.
horizontal spread
The purchase of either a call or put option and the simultaneous sale of the same type of option with typically the same strike price but with a different expiration month. Also referred to as a calendar spread.
house
(1) A designation that refers to proprietary, non-segregated clearing member firm trading activity; (2) A clearing member or a firm.
house account
Clearing firm's proprietary, non segregated trading account.
hundredweight
100 pounds. Abbreviated as cwt.
iLink
An interface to the CME Globex electronic trading platform.
implied volatility
The volatility implied by the market price of the option based on an option pricing model. In other words, it is the volatility that, given a particular pricing model, yields a theoretical value for the option equal to the current market price.
Independent Software Vendor (ISV)
A vendor who makes and sells software products that run on one or more computer hardware or operating system platforms. At CME, ISVs provide front-end applications certified by CME for trading on the CME Globex platform.
index
An indicator that is representative of a whole market or market segment, usually computed by a sum product of a list of instruments' current prices and a list of weights assigned to these instruments. The index variations give trends of the market/market segment measured.
Indicative Opening Price (IOP)
CME Indicative Opening Price. Calculated in real-time during pre-opening phase, each time an order is entered / modified / cancelled. Maximizes the quantities to be traded while minimizing the non-executed quantities.
indirect quote
Price of the domestic currency in terms of the foreign currency.
indirect rate parity
Forward premium (or discount) that is dependent on the interest rate differential between two currencies
inflation
An economic term describing conditions in which overall prices for goods and services are rising.
initial margin
See initial performance bond.
initial performance bond
The minimum deposit a clearing firm must require from customers for each contract, when an account is new or when the account's equity falls below CME Clearing minimum maintenance requirements. The contract specifications indicate the amount of this deposit for futures contracts. Previously referred to as initial margin.
instrument
A product traded at CME, i.e., the CME S&P 500 Index futures contract.
interbank rates
The price that major banks quote each other for currency transactions.
intercommodity spread
A spread in which the long and short legs are in two different but generally related commodity markets. Also called an Intermarket Spread. See spread trade.
interdelivery spread
A spread trade involving the simultaneous purchase of one delivery month of a given commodity futures contract and the sale of another delivery month of the same contract on the same exchange. See spread trade.
Interest Earning Facility 2 (IEF 2)
CME Clearing program developed to support the acceptance of money market mutual fund shares at CME to be used as performance bond collateral and to satisfy security deposit requirements.
Interest Earning Facility 3 (IEF 3)
CME Clearing House collateral program designed to allow clearing firms to satisfy core, reserve and concentration performance bond requirements with a wide range of collateral, consistent with CFTC Regulation 1.25. This program has a daily unwind of cash and securities.
Interest Earning Facility 4 (IEF 4)
CME Clearing collateral program designed to allow clearing firms to satisfy core, reserve and concentration performance bond requirements with a wide range of collateral, consistent with CFTC Regulation 1.25.
Interest Earning Facility 5 (IEF 5)
CME Clearing program in which clearing members can earn a monthly hard dollar benefit by depositing US dollar cash in a CME bank account at a select financial institution. Clearing members can satisfy a portion of their core and all of their reserve and concentration requirements by directing cash deposits into CME's account.
intermarket spread
See Intercommodity Spread
in-the-money
A call option with a strike price lower (or a put option with a strike price higher) than the current market value of the underlying futures commodity. Therefore someone who exercised their option on a future would receive a futures position that was already "in the money".
intracommodity spread
A spread involving two different months of the same commodity. Also called an Interdelivery Spread.
intrinsic value
The relationship of an option's in-the-money strike price to the current futures price. For a put: strike price minus futures price. For a call: futures price minus strike price.
introducing broker (IB)
A firm or person engaged in soliciting or accepting and handling orders for the purchase or sale of futures contracts, subject to the rules of a futures exchange, but not in accepting any money or securities to margin any resulting trades or contracts. The IB is associated with a correspondent futures commission merchant and must be registered by the CFTC.
inverted market
A futures market in which the relationship between two delivery months of the same commodity is abnormal.
invisible supply
Uncounted stocks of a commodity in the hands of wholesalers, manufacturers, and producers that cannot be identified accurately; stocks outside commercial channels but theoretically available to the market.
kappa
A measure of the rate of change in an option's theoretical value for one-unit change in the volatility assumption.
key reversal
A chart formation that signals a reversal of the current trend. In an uptrend, the market must open above the previous day's close, make a new high for the trend and then close below the previous day's low. In a downtrend, the market must open below the previous day's close, make a new low for the trend and then close higher than the previous day's high. Key reversals on days of high volume are given more weight than others.
lagging indicators
Market indicators showing the general direction of the economy and confirming or denying the trend rather than predicting its direction as implied by the leading indicators. Also referred to as concurrent indicators.
last intent day
The final day on which notices of intent to deliver on futures contracts may be presented to the Clearing House.
last inventory day
The final day in which long firms need to report their long position via the CME Clearing deliveries system.
last trading day
The day on which trading ceases in futures contract for a particular contract month.
leading indicators
Market indicators that signal the state of the economy for the coming months. Some of the leading indicators include: average manufacturing workweek, initial claims for unemployment insurance, orders for consumer goods and material, percentage of companies reporting slower deliveries, change in manufacturers' unfilled orders for durable goods, plant and equipment orders, new building permits, index of consumer expectations, change in material prices, prices of stocks, change in money supply.
lead month
The futures contract trading in lead month position on the trading floor or electronically; the most current contract month in which delivery may take place, closest to the current point in time.
leg
Each component transaction of a spread or swap.
leverage
The ability to control large dollar amounts of a commodity with a comparatively small amount of capital.
limit move
A contract's maximum price advance or decline from the previous day's settlement price permitted in one trading session, as determined by the exchange. See Price Limit.
limit order
A Limit order allows the buyer to define the maximum price to pay and the seller the minimum price to accept (the limit price). A Limit order remains on the book until the order is either executed, canceled or expires. Any portion of the order that can be matched is immediately executed.
liquid
A characteristic of a security or commodity market with enough units outstanding to allow large transactions without a substantial change in price. Institutional investors are inclined to seek out liquid investments so that their trading activity will not influence the market price.
liquidate
To offset an existing position.
liquidity
A condition that describes the ability to execute orders of any size quickly and efficiently without a substantial affect on the price. Institutional investors are inclined to seek out liquid investments so that their trading activity will not influence the market price.
liquidity data bank
A computerized profile of CBOT market activity, used by technical traders to analyze price trends and develop trading strategies. There is a specialized display of daily volume data and time distribution of prices for every commodity traded on the Chicago Board of Trade.
livestock cycle
A long, repeating pattern of increasing and decreasing livestock supply and prices.
loan program
A federal program in which the government lends money at preannounced rates to farmers and allows them to use the crops they plant for the upcoming crop year as collateral. Default on these loans is the primary method by which the government acquires stock of agricultural commodities.
locals
Exchange members who trade for their own accounts and/or fill orders for customers.
London Inter-bank Offered Rate (LIBOR)
The price at which short term deposits are traded among major banks in London. Basically, the interest rate that banks charge each other for loans (usually in Eurodollars). The LIBOR is officially fixed once a day by a small group of large London banks, but the rate changes throughout the day.
long
One who has bought futures or options contracts to create an open position or owns a cash commodity. Opposite of Short.
long cash
To own the physical commodity.
long hedge
The purchase of a futures contract in anticipation of an actual purchase in the cash commodity market. Used by processors or exporters as protection against an advance in the cash price. See hedge.
long position
A market position in which the trader has bought a futures contract or options on futures contract that does not offset a previously established short position.
long the basis
Position where a hedger is long the cash market and short in the futures market.
lot
A unit of trading (used to describe a designated number of contracts). For example, a trade quantity of one equals a "one lot;" a trade quantity of four equals a "four lot." Also called cars.
low
The lowest price of the day for a particular futures contract.
maintenance margin
See maintenance performance bond.
maintenance performance bond
The minimum equity that must be maintained for each contract in a customer's account subsequent to deposit of the initial performance bond. If the equity drops below this level, a deposit must be made to bring the account back to the initial performance bond level. This is also generally the rate charged to clearing members by CME. Previously referred to as maintenance margin.
managed account
An arrangement by which the owner of the account gives written power of attorney to someone else, usually the broker or a commodity trading advisor, to buy and sell without prior approval of the account owner. Often referred to as a discretionary Account.
managed futures
Represents an industry comprised of professional money mangers known as commodity trading advisors who manage client assets on a discretionary basis, using global futures markets as an investment medium.
margin
See Performance Bond.
margin call
See Performance Bond Call.
Market Data Application Programming Interface (MD
Market Data Application Programming Interface, to be used in conjunction with CME's order entry APIs. Employs TIBCO technology. CME developed the Market Data API,which allows firms to receive real-time market data from the electronic markets, and at a later date, also from the open outcry markets.
market maker
A firm or person with trading privileges on an exchange who has an obligation to buy when there is an excess of sell orders and to sell when there is an excess of buy orders. In the futures industry, this term is sometimes loosely used to refer to a floor trader or local who, in speculating for his own account, provides a market for commercial users of the market.
market-on-close (MOC)
An order submitted at any time within a trading session, but only executed on the close.
market order (MKT)
An order placed at any time during the trading session to immediately execute the entire order at the best available offer price (for buy orders) or bid price (for sell orders).
market on open (MOO)
A market order entered before an opening, to be executed immediately upon the open of the trading session.
marketplace
An organized venue, apart from CME, for the trade of securities, commodities or derivative instruments including, but not limited to, futures, options, options on futures or Security Futures Products.
market profile
Market Profile is an analytical tool that organizes price and time information to reveal trends and patterns as they develop. Its ability to identify areas where price is being accepted and where price is being rejected allowing traders of any market to adjust their trading accordingly.
market reporter
A person employed by the exchange and located in or near the trading pit who records prices as they occur during trading.
market segment
A part of a market that relates to a place, an exchange authority, a type of security (equity / bond / option / future), and a list of securities with a given set of trading methods
market value
The current value of all commodities held in a performance bond account.
market with protection
Electronic market orders at CME Group are implemented using a "Market with Protection" approach. Unlike a conventional Market order, where customers are at risk of having their orders filled at extreme prices, Market with Protection orders are filled within a predefined range of prices (the protected range). The protected range is typically the current best bid or offer, plus or minus 50 percent of the product's No Bust range. If the entire order cannot be filled within the protected range, the unfilled quantity remains on the book as a Limit order at the limit of the protected range.
mark-to-market
To debit or credit on a daily basis a margin account based on the close of that day's trading session. In this way, buyers and sellers are protected against the possibility of contract default.
matched trade
The execution of the buy and sell orders that together consummate a trade; consists of one or more contracts and occurs when the same price is specified by buy and sells orders, for a specified number of contracts.
maturity
Period within which a futures contract can be settled by delivery of the actual commodity; the period between the first notice day and the last trading day of a commodity futures contract.
maximum price fluctuation
The maximum amount the contract price can change up or down during one trading session, as stipulated by exchange rules. Consult CME Clearing contract specifications for specific price limit information.
member
An individual admitted to membership on the exchange or any of its Divisions.
member performance bond
The minimum equity that must be maintained for each contract in a member's account subsequent to deposit of the initial margin. Also see member rate.
membership or membership interest
The trading right associated with a Class B Share in any of the following classes: Class B-1 (CME Membership), Class B-2 (IMM Membership), Class B-3 (IOM Membership) and Class B-4 (GEM Membership). A membership or membership interest may only be purchased or sold with its associated Class B Share.
minimum price fluctuation
The smallest increment of price movement possible in trading a given contract often referred to as a tick. The minimum unit by which the price of a commodity can fluctuate, as established by the Exchange.
misclear
The incorrect matching of trades between two brokers or between two clearing firms.
money supply
The amount of money in the economy, consisting primarily of currency in circulation plus deposits in banks: M-1 U.S. money supply consisting of currency held by the public, traveler's checks, checking account funds, NOW and super- NOW accounts, automatic transfer service accounts, and balances in credit unions. M-2 U.S. money supply consisting M-1 plus savings and small time deposits (less than $100,000) at depository institutions, overnight repurchase agreements at commercial banks, and money market mutual fund accounts. M-3 U.S. money supply consisting of M-2 plus large time deposits ($100,000 or more) at depository institutions, repurchase agreements with maturities longer than one day at commercial banks, and institutional money market accounts.
moving average chart
A chart recording moving averages (three-day, ten-day, etc.) of market prices.
moving averages
A statistical price analysis method of recognizing different price trends. A moving average is calculated by adding the prices for a predetermined number of days and then dividing by the number of days.
Mutual Offset System (MOS)
In 1984 the CME and the Singapore Exchange (SGX) established a mutual offset agreement, which resulted in the implementation of the Mutual Offset System (MOS. In accordance with this agreement, trades executed on one exchange can be transferred to the books of a firm on the other exchange. Currently only Eurodollar, Euroyen, Euroyen LIBOR and Nikkei Yen futures are eligible contracts for MOS.
naked futures position
An open futures position that is not covered by an offsetting futures position or by an options contract against which it can be spread.
naked options position
An open options contract that is not covered by an offsetting position in the underlying futures commodity or by another options contract against which it can be spread.
narrow-based index future
Refers to a futures contract based upon a Security Index that is considered narrow-based as defined in Section 1a(25) of the CEA.
National Futures Association (NFA)
The self regulatory organization of the futures industry. Chartered by Congress in 1981, the NFA regulates the activities of its member brokerage firms and their employees. Overseen by the Commodity Futures Trading Commission (CFTC).
National Introducing Brokers Association
Established in 1991-the National Introducing Brokers Association is one of the foremost, nationally recognized organizations representing professionals in the futures and options industry.
nearby
The nearest active trading month of a futures or options on futures contract. Also referred to as the lead month.
near-the-money
The relationship between an option's strike price and the value of the underlying instrument, where the strike price is near the underlying instrument's current market price.
negative yield curve
A chart in which the yield level is plot on the vertical axis and the term to maturity of debt instruments of similar creditworthiness is plotted on the horizontal axis. The yield curve is positive when long-term rates are higher than short-term rates. However, the yield curve is referred to as negative or inverted as short term rates begin to rise above longer term ones.
negotiable warehouse receipt
A legal document issued by a warehouse describing and guaranteeing the existence of a specific quantity (and sometimes a specific grade) of a commodity stored in the warehouse.
net change
The amount of increase or decrease from the previous trading period's settlement price.
net margining
A method by which a clearing firm's margins are based on the net position, e.g. the remaining position after netting long positions in a contract against the short positions in the customer origin. For example, if a firm had only two accounts for two customers in its customer segregated origin and one of those accounts had three open long positions and the other had two open short positions, the firm's margin would be based on the one net long position.
net position
The difference between the long contracts and the short contracts held in any one commodity.
non-FCM
A clearing member of the exchange that is not required to register with the CFTC as a futures commission merchant because it handles no U.S. customer business.
not held
A discretionary note on an order telling the floor broker that he or she won't be held accountable if the trade is executed outside the requirements of the order.
notice day
The day the buyer with the oldest long position is matched with the seller's intent and both parties are notified of delivery obligations.
notional value
The underlying value (face value), normally expressed in U.S. dollars, of the financial instrument or commodity specified in a futures or options on futures contract.
offer (ask or sell)
An offer to sell a specific quantity of a commodity at a stated price. (Opposite of a bid.)
offset
To remove an open position from an account by establishing a position equal to or opposite the existing position, making or taking delivery, or exercising an option (i.e., selling if one has bought, or buying if one has sold.
offsetting a hedge
For a short hedger, to buy back futures and sell a commodity. For a long hedger, to sell back futures and buy a commodity. Also called lifting a hedge.
omnibus account
An account of an originating FCM carried by a clearing FCM that combines the transactions of two or more accounts of the originating FCM in the name of the originating FCM rather than designating the accounts separately. The identity of the individual accounts is not disclosed to the carrying broker
opening
The period at the beginning of the trading session officially designated by the exchange during which all transactions are considered made "at the opening."
opening price
The price at which the first transaction was completed.
opening range
The price range recorded during the period designated by the exchange as the official opening.
open interest
The total number of futures contracts long or short in a delivery month or market that has been entered into and not yet offset or fulfilled by delivery Also known as Open Contracts or Open Commitments. Each open transaction has a buyer and a seller, but for calculation of open interest, only one side of the contract is counted.
open market operation
The buying and selling of government securities Treasury bills, notes, and bonds by the Federal Reserve.
open order
An order that remains good until filled, canceled, or eliminated. See Good-'till-canceled
open outcry
A method of public auction for making bids and offers in the trading pits of futures exchanges.
open position
A long or short position that has not been liquidated.
option contract
A contract that gives the bearer the right, but not the obligation, to be long or short a futures contract at a specified price within a specified time period. The specified price is called the strike price. The futures contract that the long may establish by exercising the option is referred to as the underlying futures contract.
option assignment
See Assignment
option buyer
One who purchases an option and pays a premium.
option premium
The price a buyer pays for an option. Premiums are arrived at through open competition between buyers and sellers on the trading floor of the exchange.
option seller (writer)
One who sells an option and receives a premium.
or better order (OB)
Order qualifier that instructs a broker to fill an order at a specific price or better.
order
A request by a trader to buy or sell a given futures instrument with specified conditions such as price, quantity, type of order.
order-cancels-order (OCO)
An order qualifer that consists of two linked orders, typically (but not always) a Limit order and a Stop order, that both work until one order is filled, at which time the other order is canceled.
order to pay
A payment guarantee provided by a buyer's (or in some cases, the seller's) paying bank to CME's agent bank to guarantee payment on a currency delivery transaction. Orders to Pay are due by 1:00 p.m. on the day following the last day of trading in currencies.
order type
A property of an order, containing the conditions to which this order must adhere for execution (e.g., limit, market, stop). See CME Globex order type.
origin
The type of account (house, customer, or customer non-segregated) for which a trade was executed. Also see segregation type.
out-of-the-money
A term used to describe an option that has no intrinsic value. A call option with a strike price higher (or a put with a strike price lower) than the current market value of the underlying futures commodity. Since it depends on current prices, an option can vary from in the money to out of the money with market price movements during the life of the options contract.
overbought
A technical opinion of a market which has risen too high in relation to underlying fundamental factors.
oversold
A technical opinion of a market which has fallen too low in relation to underlying fundamental factors.
Over the Counter (OTC) Market
A market in which custom-tailored contracts such as stocks and foreign currencies are bought and sold between counterparties and are not exchange traded.
packs
The simultaneous purchase or sale of an equally weighted, consecutive series of four futures contracts, quoted on an average net change basis from the previous day's settlement price. Packs provide a readily available, widely accepted method for executing multiple futures contracts with a single transaction.
payment-in-kind program
A government program in which farmers who comply with a voluntary acreage-control program and set aside an additional percentage of acreage specified by the government receive certificates that can be redeemed for government-owned stocks of grain.
performance bond
Funds that must be deposited as a performance bond by a customer with his or her broker, by a broker with a clearing member or by a clearing member, with the Clearing House. The performance bond helps to ensure the financial integrity of brokers, clearing members and the exchange as a whole. Consult the Contract Specifications for margin requirements of specific contracts.
performance bond call
A request from a brokerage firm to a customer to bring performance bond deposits up to minimum levels or a request by CME Clearing to a clearing firm to bring clearing performance bonds back to levels required by the Exchange Rules. Most exchanges refer to this as a "margin call."
performance bond to clearing house
The minimum dollar deposit required by CME Clearing from its clearing members in accordance with their positions. This is one of the financial safeguards that help to ensure that clearing members (usually companies or corporations) perform on their customers' open futures and options contracts.
pit
The area on the trading floor of where trading in a specific futures or options contracts is conducted by open outcry.
plain vanilla swap
An individual simultaneously buys and sells the same amount of the same currency with the same counterparty, with the two legs of the transaction maturing on different dates and trading at different exchange rates.
point and figure chart
A graph of prices charted where Xs denote price increases and Os represent price decreases. A method used by technical analyst to help anticipate price movement.
position
An obligation to perform in the futures or options market. A long position is an obligation to buy at a specified date in the future. A short position is an obligation to sell at a specified date in the future. However a vast majority of all open positions are simply offset prior to expiration. See also call option and put option.
position adjustment
The position adjustment may increase or decrease a position in a given contract and origin by equal quantities long and short to correct discrepancies in position reporting. The adjustment is made to reconcile out of balance trade conditions between clearing records and transaction records.
position limit
The maximum number of speculative futures contracts one can hold as determined by the Commodity Futures Trading Commission and/or the exchange upon which the contract is traded. Also referred to as trading limits.
position trader
A trader who takes a position in anticipation of a longer term trend in the market. Unlike a day trader a position trader hopes to maintain the position over a longer period of time.
premium
(1) The price paid by the purchaser of an option to the grantor (seller);(2) The amount by which a cash commodity price trades over a futures price or another cash commodity price.
price limit
The maximum daily price fluctuations on a futures contract during any one session, as determined by the Exchange. (Also known as limit).
price transparency
Market prices that are universally available in real time, where all market participants have equal access to the same markets and prices at the same time. This facilitates a fair and anonymous trading environment where the best bid and best offer have priority. A level playing field.
primary dealer
A designation given by the Federal Reserve System to commercial banks or broker/dealers who meet specific criteria. Among the criteria are capital requirements and meaningful participation in the Treasury auctions.
primary market
(1) For producers, their major purchaser of commodities; (2) in commercial marketing channels, an important center at which spot commodities are concentrated for shipment to terminal markets; and (3) to processors, the market that is the major supplier of their commodity needs.
prime rate
Interest rate charged by institutional banks to their larger most creditworthy customers.
Producer Price Index (PPI)
A measure of the average change in prices received by domestic producers for their output. Most of the data is collected through a systematic sampling of producers in manufacturing, mining, and service industries, and is published monthly by the Bureau of Labor Statistics.
purchase and sales (P&S) statement
A statement issued by an FCM to a customer when his or her futures or options position has changed, showing the number of contracts involved, the prices at which the contracts were bought or sold, the gross profit or loss, the commission charges, and the net profit or loss on the transactions.
purchase date
The date on which a long position, used to assign agricultural deliveries, is established on a clearing firm's books.
pure hedger
A person who places a hedge to lock in a price for a commodity. He or she offsets the hedge and transacts in the cash market simultaneously.
put option
A contract that provides the purchaser the right (but not the obligation) to sell a futures contract at an agreed price (the strike price) at any time during the life of the option. A put option is purchased in the expectation of a decline in price.
qualifier
The time for which the order is valid FAK, Session, FOK, Day, GTC, GTD. Validity field options. See CME Globex Order Duration Qualifiers
quantity
Number of units or lots of a futures contract. Sometimes also called size.
quote
(1) The actual price, bid, or asked price of either cash commodities or futures contracts; (2) An indication of current bids and offers in the market on a particular instrument or spread.
quote currency
Currency being used to pay for the transaction.
rally
A market reaction resulting in an upward movement of prices. The opposite of a decline.
range
The difference between the highest and lowest prices recorded during a given time period, trend, or trading session.
ratio spread
This strategy, which applies to both puts and calls, involves buying or selling options at one strike price in greater number than those bought or sold at another strike price.
reciprocal of european terms
One method of quoting exchange rates, which measured the U.S. dollar value of one foreign currency unit, i.e., U.S. dollars per foreign units. See European Terms.
reclaim
An act carried out by a seller who has tendered a live cattle delivery certificate that the assigned buyer has retendered. A seller will do this to collect the retender fee. To reclaim, the original seller establishes a long position in the pit and submits a reclaim notice. If no one demands the certificate of delivery, the seller takes assignment of his own retendered certificate and collects the accrued retender fee, thus eliminating the delivery obligation.
reference price
The price of future contract used as "reference" e.g., for determining an opening price, starting an algorithm, or figuring into an index; is usually the settlement price or last closing price.
registered commodity representative
For a contract's CME Globex trading hours on a given calendar day beginning after that contract's RTH session on that calendar day and ending no later than 4:00 p.m., Chicago time, on that same calendar day, the Reference Regular Trading Hours (RTH) Session is that contract's second-previous RTH session. For a contract's CME Globex trading hours beginning at or after 4:00 p.m., Chicago time, and ending no later than the start of that contract's next RTH session, the Reference Regular Trading Hours (RTH) Session is that contract's previous RTH session.
registered representative
A person employed by, and soliciting business for, a commission house or futures commission merchant. See also Associated Person.
regular trading hours session (RTH)
The open outcry trading session that takes place on the trading floor.
reporting levels
Sizes of positions set by the exchanges and/or the CFTC at or above which commodity traders or brokers who carry these accounts must make daily reports about the size of the position by commodity, by delivery month, and whether the position is controlled by a commercial or non-commercial trader.
repurchase agreement or repo
An agreement between a seller and a buyer, usually in U.S. government securities, in which the seller agrees to buy back the security at a later date.
Request for Quote (RFQ)
The process whose purpose is to invite market participants to bid or offer on specific products and markets. This action will typically generate additional interest and, in the case of products supported by a market-maker program, market makers are obliged to respond to a specified percentage of RFQs.
reserve requirements
The minimum amount of cash and liquid assets as a percentage of demand deposits and time deposits that member banks of the Federal Reserve are required to maintain.
resistance line
The place on a chart where the selling of futures contracts is sufficient to halt a rise in prices.
retender
An act that an assigned long may perform to avoid obligation to receive delivery of live cattle. To avoid obligation, the assigned long must establish a short position on the business day following assignment and pay a retender fee.
retracement
A price move in the opposite direction of a recent trend.
reverse crush spread
The sale of soybean futures and the simultaneous purchase of soybean oil and meal futures.
risk
(1)The possibility of loss. (2) The dollar difference between the current price and the price at which the liquidation of open positions would occur. (3) The portion of the performance bond requirement associated with the likely worst case change in value from one day to the next.
round-turn
A completed transaction involving both a purchase and a liquidating sale, or a sale followed by a covering purchase. A round turn counts both the buy and the sell as one event. In a typical exchange volume measurement, a one-contract trade would be counted as one round turn (i.e., single event, same trade, different customers). From the customer's perspective, a round turn represents two filled orders from his or her brokerage firm - one to take a position and one to offset that position (i.e., same customer, different trades).
runaway gap
A gap in prices after a trend has begun that signals the halfway point of a market move.
runners
Messengers who rush orders received by phone clerks to brokers for execution in the pit.
scalp
To trade for small gains. Scalping normally involves establishing and liquidating a position quickly, usually within secconds.
scalper
A speculator on an exchange floor who trades in and out of the market on very small price fluctuations. The scalper, trading in this manner, provides market liquidity but seldom carries a position overnight.
secondary market
Market where previously issued securities are bought and sold.
security futures products
A contract based on securities products as such term is defined by 1a (32) of the CEA. Security Futures Products (SFP) include futures contracts based upon a single security (or stock futures); futures contracts based upon a narrow-based security index; and, options on any security futures as those terms are defined in Sections 1a(25) and 1a(31) of the CEA.
segregation type
The account which holds open position for customer (segregated), for the house (non-segregated), and for customer non-segregated origins.
seller
A person who takes a short futures position or grants (sells) a commodity option. An option seller is also called a marker, grantor, or granter, or writer.
selling climax
An extraordinarily high volume occurring suddenly in a downtrend, signaling the end of the trend.
serial options
Options for months for which there are no futures contracts. The underlying futures contract for a serial option month would be the next nearby futures contract.
settlement price
The official daily closing price of futures contracts. The settlement price is determined at the end of the regular trading hours; used to calculate gains and losses in futures accounts, performance bond calls and invoice prices for deliveries. See "closing range."
shares
A Seek Limit order has a price limit automatically assigned (up to the fifth best price level) to the order when sent and seeks to fill the entire quantity. Available only on CME Globex Trader.
short
An open futures or options position where you have been a net seller. The opposite of being long.
short hedge
The sale of a futures contract in anticipation of a later cash market sale. Used to eliminate or minimize the possible decline in value of ownership of an approximately equal amount of the cash financial instrument or physical commodity. See hedge.
short-term interest rates
Interest rates on loan contracts--or debt instruments such as Treasury bills, bank certificates of deposit, or commercial paper--having maturities of less than one year. Often called money market rates.
short the basis
Position where a hedger is short the cash market and long the futures market.
side
Each buy and sell represents 1/2 of a trade. Every contract that trades has two sides - the buy side and the sell side. Taken together, these two sides equal one unit of volume known as a round turn.
side-by-side trading
Where a single futures contract trades in two locations at the same time. Usually on a trading floor via open outcry as well as on an electronic trading platform.
single-stock futures (SSF)
OneChicago, LLC is a joint venture created by Chicago Mercantile Exchange® (CME), Chicago Board of Options Exchange® (CBOE), and Chicago Board of Trade® (CBOT), to trade single stock futures (SSF) and narrow-based stock indexes.
SPAN® performance bond system
The Standard Portfolio Analysis of Risk (SPAN) Performance Bond System). A program that determines portfolio performance bond requirements for futures, options, cash, and other instruments. SPAN is a portfolio based approach to risk management and performance bond calculations. CME Clearing uses SPAN to calculate overnight margin for it's clearing firms and clearing firms use SPAN to margin their customers.
speculator
An individual who accepts market risk in an attempt to profit from buying and selling futures and/or options contracts by correctly anticipating future price movements.
spot market
The market in which cash transactions for the physical commodity occurs -- (cattle, currencies, stocks, etc.) are bought and sold for cash and delivered immediately.
spot price
The price at which a physical commodity for immediate delivery is selling at a given time and place. The cash price.
spread
The price difference between two contracts. Holding a long and a short position in two or more related futures or options on futures contracts, with the objective of profiting from a change in the price relationship.
spread order
An order that initiates the simultaneous purchase and sale of related futures or options contracts. Complex strategies using multiple contracts (or legs) are employed.
standard deviation
A representation of the risk associated with a financial instrument (stocks, bonds, etc.) or a portfolio of investments. The larger the standard deviation in a given period, the greater implied risk. Risk is an important factor in determining how to efficiently manage investments and understanding the standard deviation gives investors a statistical basis for their decisions.
steer/corn ratio
The relationship of cattle prices to feeding costs. It is measured by dividing the price of cattle ($/hundredweight) by the price of corn ($/bushel). When corn prices are high relative to cattle prices, fewer units of corn equal the dollar value of 100 pounds of cattle. Conversely, when corn prices are low in relation to cattle prices, more units of corn are required to equal the value of 100 pounds of beef. A ratio used to express the relationship of feeding costs to the dollar value of livestock.
stock index
A statistic reflecting the composite value of a selected group of stocks. How a particular stock index tracks the overall market depends on the sampling of stocks, the weighing of individual stocks, and the method of averaging used to establish the index. Many indexes are used to benchmark the performance of portfolios such as mutual funds.
stop close only
stop order that is executed only if the stop price is triggered during the closing range of the trading session.
stop limit order
A resting Stop Limit order is triggered when the designated price is traded on the market. The order then enters the order book as a Limit order with the customer's specified limit price. The order is executed at all price levels between the trigger price and the limit price. If the order is not fully executed, the remaining quantity of the order remains in the market. A buy Stop Limit order must have a trigger price greater than the last traded price for the instrument. A sell Stop Limit order must have a trigger price lower than the last traded price.
stop order
An order that becomes a market order when a particular price level is reached. A sell stop is placed below the market; a buy stop is placed above the market. Sometimes referred to as Stop Loss Order.
Stop With Protection
Electronic stop orders at CME Group are implemented using a "Stop with Protection" approach. Unlike a conventional Stop order, where customers are at risk of having their orders filled at extreme prices, Stop with Protection orders are filled within a predefined range of prices (the protected range). A Stop with Protection order is triggered when the designated price is traded on the market. The order then enters the order book as a Limit order with the limit price equal to the trigger price, plus or minus the pre-defined protected range. The protected range is typically the trigger price, plus or minus 50 percent of the No Bust range for that product. The order is executed at all price levels between the trigger and limit price. If the order is not completely filled, the remaining quantity rests in the market at the limit price. A buy Stop order must have a trigger price greater than the last traded price for the instrument. A sell Stop order must have a trigger price lower than the last traded price.
storage gain
The selling price received after storage minus the previous harvest market price.
straddle
The purchase or sale of an equal number of puts and calls, with the same strike price and expiration dates. A long straddle is a straddle in which a long position is taken in both a put and a call option. A short straddle is a straddle in which a short position is taken in both a put and a call option.
strangle
The purchase of a put and a call, in which the options have the same expiration and the put strike is lower than the call strike, called a long strangle. Also the sale of a put and a call, in which the options have the same expiration and the put strike is lower than the call strike, called a short strangle.
strike price
The price at which the buyer of an option may choose to exercise his right to purchase orsell the underlying futures contract. See also exercise price.
supply
The quantity of a commodity that producers are willing to provide to the market at a given price.
support
The place on a chart where the buying of futures contracts is sufficient to halt a price decline.
swaps
Simultaneous purchase and sale of currencies or interest rate products in spot and forward market transactions.
synthetic call option
A combination of a long futures contract and a long put, called a synthetic long call. Also, a combination of a short futures contract and a short put, called a synthetic short call.
synthetic futures
A combination of a put and a call with the same strike price, in which both are bullish, called synthetic long futures. Also, a combination of a put and a call with the same strike price, in which both are bearish, called synthetic short futures.
Synthetic Option
A combination of a futures contract and an option, in which one is bullish and one is bearish.
synthetic put option
A combination of a short futures contract and a long call, called a synthetic long put. Also, a combination of a long futures contract and a short call, called a synthetic short put.
synthetic spot
Futures price information that is consistent with spot market convention where positive or negative forward points are added to the futures price to produce an equivalent spot price.
tag
With the FIX protocol, a delimited message component that contains a particular purpose-not just start or stop. Example: Tag 50 in a message indicates the real trader's ID, not just the company he or she works for.
target price
An expected selling or buying price. For long and short hedges with futures: futures price + expected basis. For puts: futures price - premium + expected basis. For calls: futures price + premium + expected basis.
technical analysis
An approach to forecasting commodity prices which examines patterns of price change, rates of change, and changes in volume of trading and open interest, without regard to underlying fundamental market factors.
TeleSTAT
CME® TeleSTAT is an automated phone system that provides individual traders the ability to cancel and status CME Globex® orders. After entering a unique ID and PIN, users quickly navigate through the menu prompts to expedite their requests
tender (intent)
An intention to deliver, submitted to the Clearing House against a futures contract.
theta
The measure of the change in an option's premium given a change in the option's time until expiration. Equal to the change in the option's premium divided by the change in time to expiration.
tick
The minimum fluctuation in price allowed for a futures or options contract during a trading session as specified by the contract terms in CME Rulebook
ticker
Summarized display of almost instantaneous information on instruments of an exchange. Provides information on performed trades by displaying the instrument and the last trade price in scrolling mode.
time
Except as otherwise specifically provided, any reference to time shall mean local Chicago time.
time and sales data
Data that provides price and time information of every transaction throughout the day.
time decay
Decline in the theoretical value of an option position based solely on the passage of time.
time value
The amount by which an option's premium exceeds its intrinsic value. Usually relative to the time remaining before the option expires.
Total Return Asset Contracts (TRAKRS)
Total Return Asset ContractsSM (TRAKRS) are designed to enable customers to track an index of stocks, bonds, currencies or other financial instruments. TRAKRS are futures contracts based on an index that is calculated on a total return basis. Declared dividends and other distributions are included in the calculation of the index.
trade balance
The difference between a nation's imports and exports of merchandise.
trade date
The date on which a trade was executed.
trade or transaction
Situation in which two orders, one buy and one sell, match (that is, the conditions fit together) partially or in total. Any purchase or sale of a contract on the exchange floor or using facilities or CME Globex during trading hours in accordance with the exchange rules. Trade acknowledgments are sent to the two counterparts that initiated the matching orders, to the clearing system, and to the traders.
trade price
The price at which a trade was executed on the original trade date.
trader
(1) A person who takes positions in the futures market, usually without the intention of making or taking delivery; (2) A member of the exchange who buys and sells futures and options through the floor of the exchange. See "day trader", "floor broker", "position trader," and "scalper".
trading day
Period within which all executed trades for a given class are cleared on the same day. Hours of trading as determined by the Board for each contract starting with the opening of trading and ending with the close of trading for such contract; this period may very well exceed 24 hours. One or more sessions could take place. Often referred to as clearing day.
trading limit
The maximum number of speculative futures contracts one can hold as determined by the Commodity Futures Trading Commission and/or the exchange upon which the contract is traded. Also referred to as position limit.
trading session
Trading Session The time span marked by the start and end of the period during which the CME Globex platform is in operation. The start of the CME Globex session usually occurs in the afternoon or evening, and marks the beginning of the next trading day. (For example, orders entered during Sunday's evening session are dated for and cleared on Monday). The trading day includes both the CME Globex trading session (i.e., Electronic Trading Hours (ETH)) and the trading floor open outcry session (i.e., Regular Trading Hours (RTH)), if the CME Globex and open outcry sessions overlap for a given product.
Treasury Bill
A Treasury bill is a short-term U.S. government obligation with an original maturity of one year or less. Unlike a bond or note, a bill does not pay a semi-annual, fixed rate coupon. A bill is typically issued at a price below its par value and is therefore a discounted instrument. The level of the discount depends on the level of prevailing interest rates. In general, the higher short-term interest rates are, the greater the discount. The return to an investor in bills is simply the difference between the issue price and par value.
Treasury Bond
Government-debt security with a coupon and original maturity of more than 10 years. Interest is paid semiannually.
Treasury Note
Government-debt security with a coupon and original maturity of one to 10 years.
trend
The general direction of the market.
underlying
The stock, commodity, futures contract, or cash index against which a futures or options contract is valued.
underlying futures contract
The futures contract that may be purchased (in the case of a call) or sold (in the case of a put upon the exercise of the option.
uptrend
The ability to choose the legs of a spread if the spread is not identified by CME already.
user defined spreads
The ability to choose the legs of a spread if the spread is not identified by CME already.
UTI
Unique Trading Identifier. See "SLE user ID."
vega
The measure of the change in an option's premium for a 1% change in the volatility of the underlying futures contract. Equal to the change in premium divided by 1% change in volatility.
vertical spread
Buying and selling puts or calls of the same expiration month but having different strike prices.
Virtual Private Network (VPN)
A private data network that makes use of the public telecommunication infrastructure, maintaining privacy through the use of a tunneling protocol and security procedures.
volatility
A measurement of the change in price over a given time period.
volatility quote
An alternative means of quoting options, or combinations involving options, by bidding or offering the implied volatility. Any transactions quoted in volatility terms will be translated into price terms for clearing purposes by means of a standard options pricing model maintained and disseminated by the exchange.
volume
The number of contracts in futures or options on futures transacted during a specified period of time.
warehouse receipt
A document indicating a specific contract and location information of a commodity in storage; commonly used as the instrument of transfer of ownership in both cash and futures transactions.
wire house
An individual or organization that solicits or accepts orders to buy or sell futures contracts or options on futures and accepts money or other assets from customers to support such orders. Also referred to as "commission house" or Futures Commission Merchant (FCM).
With Discretion (DISC) or Disregard the Tape (DRT)
A note on an order telling the floor broker to use his or her own good judgment in filling the order.
writer
The issuer or seller of an option contract.
yard
Market slang for a billion.
yield change
One day's change in the futures' interest rate - equal and opposite to change in the settlement price.
yield curve
A chart that graphically depicts the yields of different maturity bonds of the same credit quality and type. Yield is depicted on the vertical axis and maturity on the horizontal axis. A normal yield curve is upward sloping, with short-term rates lower than long-term rates. An inverted yield curve is downward sloping, with short-term rates higher than long-term rates. A flat yield curve occurs when short-term rates are the same as long-term rates.
yield-to-maturity
The rate of return an investor receives if a fixed-income security is held to maturity.
zero-sum game
Type of game when one player gains only at the expense of another player.