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Amortization
Liquidation of a debt through installment payments.
Exercise Price (Strike Price)
The price, specified in the option contract, at which the underlying futures contract, security, or commodity will move from seller to buyer.
Buy (or Sell) On Opening
To buy (or sell) at the beginning of a trading session within the open price range.
Basis Swap
A swap whose cash settlement price is calculated based on the basis between a futures contract and the spot price of the underlying commodity or a closely related commodity on a specified date.
Call
An option contract giving the buyer the right but not the obligation to purchase a commodity or other asset or to enter into a long futures position
Butterfly Spread
A three-legged option spread in which each leg has the same expiration date but different strike prices. For example, a butterfly spread in soybean call options might consist of one long call at a $5.50 strike price, two short calls at a $6.00 strike price, and one long call at a $6.50 strike price.
Margin
The amount of money or collateral deposited by a customer with his broker, by a broker with a clearing member, or by a clearing member with a clearing organization. The margin is not partial payment on a purchase.
Allowances
The discounts (premiums) allowed for grades or locations of a commodity lower (higher) than the par (or basis) grade or location specified in the futures contract. See Differentials.
Carrying Charges
Cost of storing a physical commodity or holding a financial instrument over a period of time. These charges include insurance, storage, and interest on the deposited funds, as well as other incidental costs.
Basis Grade
The grade of a commodity used as the standard or par grade of a futures contract.
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