Glossary: P-R
- P -
Par: Refers to the standard delivery point or points or the quality of a commodity that is deliverable on a futures contract at contract price. Serves as a benchmark upon which the base discounts or premiums for varying quality and delivery locations (in bond markets, an index “usually 100″ representing the face value of a bond).
Parity: Par Rate.
Pegged Price: The price at which a commodity has been fixed by agreement.
Pit brokers: A member who executes orders for the account of one or more clearing members.
Point: A measure of price change equal to 1/100 of one cent in most futures traded in decimal units (in grains, it is of one cent; in T-bonds, it is one percent of par).
Position: One’s interest in the market, either long or short, in the form of one or more open contracts.
Positive Carry: The cost of financing a financial instrument, where the cost is less than the current return of the financial instrument.
Premium: Above par, it is the amount a price would be increased to purchase a better quality commodity and it refers to a futures delivery month selling at a higher price than another.
Primary Market: Vital distribution centres at which spot commodities are originally accumulated for shipment into commercial channels.
Prime Rate: The interest rate charged by the financial institutions to their biggest and creditworthy clients.
Put: Option contract which gives the holder the right to sell a specified quantity of a particular commodity at a given price (the “strike price”) prior to or on a future date.
Pyramiding: The use of profits made on a previously established position as margin for adding to that position.
- Q -
Quotation: The actual price or the bid or ask price of either cash commodities or futures contracts.
- R -
Rally: An upward movement of prices after a decline (same as Recovery).
Range: The high and low price of a commodity during a given period.
Ratio Hedge: The number of options in comparison with the number of futures contracts bought or sold in order to establish a hedge that is risk neutral.
Reaction: The decline in price movement tendency of a commodity after a price advance.
Recovery: Description of a price advance after a decline.
Regular Warehouse: A warehouse that satisfies exchange requirements for financing, facilities, capacity, and location and has been approved as acceptable for delivery of commodities against futures contracts.
Registered Representative: A person employed by soliciting business for a futures commission merchant.
Roundturn: The purchase and sale of a contract.
Retracement: A reversal within a major price trend.
Revaluation: An official increase in the exchange rate or price level of the currency.
Round Lot: A quantity of a commodity equal in size to the corresponding futures contract for the commodity.
