Futures Definitions

Location

A Delivery Point for a futures contract

Backwardation

Market situation in which futures prices are progressively lower in the distant delivery months. Backwardation is the opposite of contango. Also see: Inverted Market

Sold-Out-Market

When liquidation of a weakly-held position has been completed, and offerings become scarce, the market is said to be sold out.

Back pricing

Fixing the price of a commodity for which the commitment to purchase has been made in advance. The buyer can fix the price relative to any monthly or periodic delivery using the futures markets.

Life of Contract

Period between the beginning of trading in a particular futures contract and the expiration of trading. In some cases, this phrase denotes the period already passed in which trading has already occurred. For example, “The life-of-contract high so far is $2.5

Emergency

Any market occurrence or circumstance which requires immediate action and threatens or may threaten such things as the fair and orderly trading in, or the liquidation of, or delivery pursuant to, any contracts on a contract market.

Short the Basis

The purchase of futures as a hedge against a commitment to sell in the cash or spot markets. See also: Hedging

Economically Deliverable Supply

That portion of the deliverable supply of a commodity that is in position for delivery against a futures contract, and is not otherwise unavailable for delivery. For example, Treasury bonds held by long-term investment funds are not considered part of the

Last Notice Day

The final day on which notices of intent to deliver on futures contracts may be issued.

Arbitration

A process for settling disputes between parties that is less structured than court proceedings. NFA ’s arbitration program provides a forum for resolving futures-related disputes between NFA members or between NFA members and customers. Other f