Trading Commodities, Commodity Options and Currencies (Collection)

Glossary

A

abandon

To elect not to exercise or offset a long option position.

actuals

The physical or cash commodity, as distinguished from a futures contract. See cash commodity and spot commodity.

american option

An option that can be exercised at any time prior to or on the expiration date. See European option.

arbitrage

A strategy involving the simultaneous purchase and sale of identical or equivalent commodity futures contracts or other instruments across two or more markets to benefit from a discrepancy in their price relationship. In a theoretical efficient market, there is a lack of opportunity for profitable arbitrage. See spread.

arbitration

A process for settling disputes between parties that is less structured than court ...