Glossary: M-O

– M –

Margin: The proportion of cash required by the broker in security to cover an open leverage position. Margin is rolling, such that as transactions are periodically settled brokers may require traders to deposit more capital to cover their potential liabilities. This is usually set at a rolling figure of between 5% and 15%.

Margin Call: A request from a brokerage firm to a customer to bring margin deposits up to initial levels.

Market If Touched (MIT): A price order that becomes a market order automatically when the price is reached.

Maturity: Period within which a futures contract can be settled by delivery of the actual commodity.

Momentum: The relative change in price over a specific time interval in the technical analysis.

Monetary Policy: Government actions taken to control a country’s domestic economy by adjusting the money supply, it has a direct relationship with the fiscal policy.

– N –

Naked Option: The sale of a call without holding an offsetting position in the underlying commodity.

Nearbys: The closest delivery months of a commodity futures market.

Negotiable Warehouse Receipt: A legal certificate issued by a warehouse explaining and guaranteeing the existence of an exact quantity of a commodity in a warehouse.

Nominal price: Price quotation on futures for a period in which no trading has actually taken place.

Notice Day: Any day on which notes of intent to deliver on futures contracts to a specified delivery month may be issued.

Notional Amount: Also called the notional principal amount, the contract amount, the reference amount, and the currency amount. The amount or each of the amounts to which interest rates are applied, in order to calculate periodic payment obligations.

– O –

Offer: Opposite of bid. The offer indicates the willingness to sell at a given price.

Offset: See evening up or liquidation.

Open Contracts: Contracts being bought or sold and are still outstanding, without having been offset.

Open Interest: Number of open contracts.

Opening price: The price or range recorded during the period designated by the exchange as the official opening.

Option: An option is a type of derivative instrument commonly traded by price speculators. Like futures, it allows traders to leverage their positions and acquire rights in the underlying assets to which they relate, but distinctly futures do not create an obligation – traders can execute their positions if it suits them financially to do so, but there is no obligation created.

Original Margin: The margin required a specific new position.

Overbought: That means the market has had a sharp advance. Rank and file traders who were bullish and long have turned bearish.

Overnight Trade: A trade which is not liquidated on the same trading day in which it was established.

Oversold: That means the market has had a sharp decline. Rank and file traders who were bearish and short have turned bullish.

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