FUTURES

• What is Contract?

A formal and legally binding agreement between two or more parties.

 

• Delivery

The changing of ownership or control of a commodity once a futures contract date expires. We can also benefit from dividend payments.

 

• Financial Future

A future contract whose value is based upon financial instruments such as a stock index, interest rates or foreign currency exchange rates.

 

 

• Hedge

To buy or sell a futures contract in order to lock in the price of the underlying commodity at a later date.

 

• Leverage

To increase the potential return on an investment through the use of futures contracts (or other financial instruments).

 

• Over the counter Trading

Trades that take place outside of a formal futures exchange.

 

• 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.

 

• Stop Order

A stop order becomes a market order once the price is met. For example, a “buy stop” is placed above the market and is executed only when the market trades at or above the stop price.

 

• Volatility

A measurement of the change in price over a given time period.