Glossary: C

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Call: An exchange-designated buying and selling period during which trading is conducted in order to establish a price or price range for a particular time.

Call Option: A contract that permits the buyer to buy a fixed quantity of commodity at a predetermined basis or striking price at any time up to the expiration of the option. The buyer pays a premium to the seller for this contract.

Car: A loose, quantitative term sometimes used to describe a contract.

Carrying broker: An associate of the commodity exchange usually a commission house broker, through whom another broker or trader elects to clear his or her trades.

Carrying charges: Cost of storing a physical commodity over a period of time. Includes insurance, storage, and interest on the invested funds as well as other incidental costs.

Cash Commodity: Also called spot commodity or Actuals, the cash commodity is the actual physical commodity as distinguished from a futures commodity.

Cash Market: A market for cash commodity. In other words, it is market for immediate delivery and payment of commodities.

Cash Price: Spot price: the current delivery price of a commodity traded in the spot market.

Cash-Settled: Futures contracts that are cash-settled are fulfilled on a cash-only basis upon reaching maturity, allowing traders to speculate on the futures markets without resulting in the need to exchange often bulky assets. At the end of the futures contract’s lifespan, the trader either pays or receives the cash equivalent of their position.

Central Bank: Financial institution that has official or semi-official status in a federal government. Central bank holds reserves of other banks and acts as a fiscal agent for the government and issues paper money.

Central rate: A rate set by the IMF (International Monetary Fund), similar to par value.

Certificate of Deposit (CD): is a time deposit, a financial product commonly offered to consumers in the United States by banks, thrift institutions.

CFO: Cancel Former Order.

Certified Stocks: Quantity of commodities that have been inspected and found to be of a quality deliverable against futures contracts. It is designated and certified for delivery by an exchange under its trading and testing regulations at delivery points specified and approved by the exchange.

Charts: Charts are used by traders to present analytical market data in a graphic, visual way. By enabling traders to draw visual correlations between different price points, and establish visual trends in an easy to spot way, charts are an invaluable tool for traders of all stages.

Chartist: Technical trader who reacts to signals derived from graphs of price movements.

Chooser Option: Refers to an option that is executed in the present but which at some pre specified future date is selected to be either a put or a call option.

Churning: Extreme or excessive trading of an account by a company broker with control of the account for the purpose of generating commissions, while taking no notice of the interests of the customer.

CFTC: Commodity Futures Trading Commission. Established in 1975, its role is to take over all commodity futures and options trading in the U.S. It consists of a chairman, vice-chairman and three other members all appointed by the president.

Class of options: Options of the same type covering the same underlying future contract or commodity.

Clearing: The practise used by the clearing house in turning into the buyer to each seller of a futures contract, and the seller to each buyer, and takes for granted the responsibility of protecting buyers and sellers from financial loss by assuring performance on each contract.

Clearing House: An adjunct of a commodity exchange through which, transactions executed on the floor of the exchange are settled. It is also charged with assuring the proper conduct of the exchange’s delivery procedures and the adequate financing of the trading.

Clearing Member: A member of an exchange clearing house. All trades of a non-clearing member must be registered and eventually settled through a clearing member.

Clearing Price: The specified monetary value assigned to a security or asset. This price is determined by the bid and ask process of buyers and sellers interested in trading the security.

(The) Close: A short period at the end of the trading session officially designated by the exchange during which the closing price range is established. Sometimes used to refer to the closing price.

Closing range: Also called closing price. It is the price (or price range) recorded during trading that takes place in the final moments of a day’s activity that is officially designated as the “close.”

Combination: Puts and calls held either long or short with different strike prices and expirations.

Commercial Grain Stocks: Commodity in storage in public and private elevators or warehouses at important markets and afloat in vessels or barges in harbors and ports.

Commercial paper: Is a debt instrument issued by well-established companies to meet short-term financing needs. Commercial paper calls for the payment of money at specified dates, usually ranging from 2 to 270 days.

Commission: A fee charged by the broker to a customer when a trading transaction takes place.

Commitment: Traders are said to be committed or have a “commitment” when they suppose the obligation to accept or make delivery by entering into a futures contracts.

Commodity: A commodity is a generic, tradable good which has a value to end users as a raw material. Commodities range from oil to wheat, soya to steel, and trade on exchanges amongst investors and users alike, with ever-fluctuating, supply-sensitive prices.

Commodity Exchange Act: Federal act passed in 1936 establishing the Commodity Exchange Commission and placing futures trading in a wide range of commodities under the regulation of the government.

Commodity Exchange Authority: The Commodity Exchange Authority was a former regulatory agency of USDA. It was established to administer the Commodity Exchange Act of 1936; it was the predecessor to the Commodity Futures Trading Commission (CFTC).

Commodity Futures Trading Commission (CFTC): The Federal regulatory agency established by the CFTC Act of 1974 to administer the Commodity Exchange Act.

Commodity Pool: An investment trust, syndicate or similar form of enterprise in which funds contributed by a number of persons are combined for purposes of trading futures or commodity options.

Commodity Pool Operator (CPO): A CPO is an individual or organization which operates or solicits funds for a commodity pool; that is, an enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts or commodity options, or to invest in another commodity pool.

Contango: Contango is the market condition in which futures contracts are priced higher than the underlying asset. This is often as a result of the enhanced costs borne by the seller over the intermittent future period, including warehousing and insurance.

Contract: A term of reference describing a unit of trading for a commodity future, similar to “round lot” in securities markets. It is also defined as an agreement to buy or sell a specified commodity, detailing the amount and grade of the product and the date on which the contract will mature and become deliverable.

Contract Grade: Grade of a commodity, that has been officially approved by an exchange as deliverable in settlement of a futures contract.

Contract Unit: The real amount of a commodity represented in a contract.

Cost of Tender: The full amount of various charges incurred when a commodity is certified and delivered on a futures contract.

Coupon: The interest rate on a fixed income security, determined upon issuance, and expressed as a percentage of par.

Cover: The purchase of futures to offset a previously established short position.

Crop Year: The period of time one harvest or storage cycle to the next, varies with each commodity.

Cross-Rate: In foreign exchange, the price of one currency in terms of another currency in the market of a third country. For example, a London dollar cross-rate could be the price of one U.S. dollar in terms of deutsche marks on the London market.

Curb Trading: Trading by telephone or by other means that takes place after the official market has closed.

Customer’s Man: A person employed by soliciting business for a futures commission merchant.

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