Glossary: A

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Abandon: The proceed of an asset holder in electing not to offset an option.

Accommodation trading: Uncompetitive kind of trading entered into by a trader.

Accumulate: Buy futures contracts in a great deal in a precise commodity at regular predetermined intervals.

Acreage Allotment: Government limitation on planted acreage of some basic crops.

Actuals: Physical products or cash commodities bought and sold on the spot market.

ADP: Alternative Delivery Procedure, a contract between a buyer and a seller by an agreement to resolve their delivery commitment independently of the exchange.

Aggregation: The theory under which all futures positions owned or controlled by one trader are joint to determine reporting status and fulfilment with speculative limits.

Allowances: The discounts (premiums) allowed the buyer for grades or locations of a commodity lower (higher) than the par (or basis) grade or location specified in the futures contract, also called differentials.

Annualize: To put on an annual basis (usually relates to interest rates).

Appreciation: An increase in the value of a market instrument.

Approved Delivery Facility: Any bank, stockyard, mill, storehouse, plant, elevator or other depository that is authorized by an exchange for the delivery of commodities tendered on futures contracts.

Arbitrage: The process of finding complimentary trading positions that guarantee a profit regardless of market movements. Usually, arbitraging occurs as a consequence of irregularities in the price of an asset across the futures and spot markets, and such opportunities are usually fleeting in nature.

Ask: The selling price of an asset or instrument – contrast with ‘bid’.

Assignable contract: A contract that allows the holder of an option to express his rights to a third party.

Assignment/Assignation: The legal process by which rights and obligations are transferred to another person. In the context of futures trading, commodities and underlying assets are usually assigned to the buying party within the warehouse, in order to prevent the significant costs of freight, insurance and handling.

At-The-Market: An order to buy or sell a futures contract at whatever price is obtainable when the order reaches the trading floor. Also called Market Order.

At-the-Money: When the exercise price of an option is the same as the current trading price of the underlying option, the latter is at-the-money.

Audit Trail: The record of trading information identifying, for example, the brokers participating in each transaction, the firms clearing the trade, the terms and time of the trade, and, ultimately, and when applicable, the customers involved.

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