Futures / Commodities Trading Terminology "P" to "R"

Glossary of Trading Terminology

Jump directly to a definition on this page by clicking on any of these words:
Jump directly to a definition on this page by clicking on any of these words:
pit | point | position | premium | price limit | purchase and sale statement | put | range | ratio hedging | reaction | round-turn | round-turn commission
pit: An octagonal platform on the trading floor of an exchange, consisting of steps upon which traders and brokers stand while trading (If circular. called a "ring").
point: The minimum unit In which changes in futures prices may be expressed (minimum price fluctuation may be in multiples of points).
position: An interest in the market in the form of open commitments.
premium: The amount by which a given futures contract's price or commodity's quality exceeds that of another contract or commodity (opposite of discount). In options, the price of a call or put, which the buyer initially pays to the option writer (seller).
price limit: The maximum fluctuation in price of a futures contract permitted during one trading session, as fixed by the rules of a contract market.
purchase and sale statement: A statement sent by the FCM to a customer when his futures position has been reduced or closed out (also called "P and S").
put: In options. the buyer of a put has the right to acquire a short position in the underlying futures contract at the strike price until the option expires; the seller (writer) of the put obligates himself to take a long position in the futures at the strike price if the buyer exercises his put.
range: The difference between the high and low price of the futures contract during a given period.
ratio hedging: Hedging a cash position with futures on a less or more than one-for-one basis.
reaction: The downward tendency of a commodity after an advance.
round-turn: The execution for the same customer of a purchase transaction and a sales transaction which offset each other.
round-turn commission: The cost to the customer for executing a futures contract which is charged only when the position is liquidated.

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