Investment Terms: C
This article is from the Investment
Investment Terms: C
- Calendar Spread:
See Interdelivery Spread and
- Call Option:
An option that gives the buyer the right,
but not the obligation, to purchase (go "long'') the underlying
futures contract at the strike price on or before the expiration date.
- Canceling Order:
An order that deletes a customer's
- Carrying Charge:
For physical commodities such as
grains and metals, the cost of storage space, insurance, and finance
charges incurred by holding a physical commodity. In interest rate
futures markets, it refers to the differential between the yield on a
cash instrument and the cost of funds necessary to buy the
instrument. Also referred to as cost of carry or carry.
Grain and oilseed commodities not consumed
during the marketing year and remaining in storage at year's
end. These stocks are "carried over'' into the next marketing year and
added to the stocks produced during that crop year.
- Cash Commodity:
An actual physical commodity someone
is buying or selling, e.g., soybeans, corn, gold, silver, Treasury
bonds, etc. Also referred to as actuals.
- Cash Contract:
A sales agreement for either immediate
or future delivery of the actual product.
- Cash Market:
A place where people buy and sell the
actual commodities, i.e., grain elevator, bank, etc. See Spot and
- Cash Settlement:
Transactions generally involving
index-based futures contracts that are settled in cash based on the
actual value of the index on the last trading day, in contrast to
those that specify the delivery of a commodity or financial
- Certificate of Deposit (CD):
A time deposit with a
specific maturity evidenced by a certificate.
The use of charts to analyze market behavior
and anticipate future price movements. Those who use charting as a
trading method plot such factors as high, low, and settlement prices;
average price movements; volume; and open interest. Two basic price
charts are bar charts and point-and-figure charts. See Technical Analysis.
Colloquialism implying that a commodity is
- Cheapest to Deliver:
A method to determine which
particular cash debt instrument is most profitable to deliver against
a futures contract.
The process by which a clearinghouse maintains
records of all trades and settles margin flow on a daily
mark-to-market basis for its clearing member.
- Clearing Corporation:
See Board of Trade Clearing
An agency or separate corporation of a
futures exchange that is responsible for settling trading accounts,
clearing trades, collecting and maintaining margin monies, regulating
delivery, and reporting trading data. Clearinghouses act as third
parties to all futures and options contracts acting as a buyer to
every clearing member seller and a seller to every clearing member
- Clearing Margin:
Financial safeguards to ensure that
clearing members (usually companies or corporations) perform on their
customers' open futures and options contracts. Clearing margins are
distinct from customer margins that individual buyers and sellers of
futures and options contracts are required to deposit with
brokers. See Customer Margin.
- Clearing Member:
A member of an exchange
clearinghouse. Memberships in clearing organizations are usually held
by companies. Clearing members are responsible for the financial
commitments of customers that clear through their firm.
- Closing Price:
See Settlement Price.
- Closing Range:
A range of prices at which buy and sell
transactions took place during the market close.
- COM Membership (CBOT):
A Chicago Board of Trade
membership that allows an individual to trade contracts listed in the
commodity options market category.
- Commission Fee:
A fee charged by a broker for
executing a transaction. Also referred to as brokerage fee.
- Commission House:
See Futures Commission Merchant
An article of commerce or a product that
can be used for commerce. In a narrow sense, products traded on an
authorized commodity exchange. The types of commodities include
agricultural products, metals, petroleum, foreign currencies, and
financial instruments and indexes, to name a few.
- Commodity Credit Corporation (CCC):
A branch of the
U.S. Department of Agriculture, established in 1933, that supervises
the government's farm loan and subsidy programs.
- Commodity Futures Trading Commission (CFTC):
regulatory agency established under the Commodity Futures Trading
Commission Act, as amended in 1974, that oversees futures trading in
the United States. The commission is comprised of five commissioners,
one of whom is designated as chairman, all appointed by the President
subject to Senate confirmation, and is independent of all cabinet
- Commodity Pool:
An enterprise in which funds
contributed by a number of persons are combined for the purpose of
trading futures contracts or commodity options.
- Commodity Pool Operator (CPO):
An individual or
organization that operates or solicits funds for a commodity pool.
- Commodity Trading Adviser (CTA):
A person who, for
compensation or profit, directly or indirectly advises others as to
the value or the advisability of buying or selling futures contracts
or commodity options. Advising indirectly includes exercising trading
authority over a customer's account as well as providing
recommendations through written publications or other media.
- Computerized Trading Reconstruction (CTR) System:
Chicago Board of Trade computerized surveillance program that
pinpoints in any trade the traders, the contract, the quantity, the
price, and time of execution to the nearest minute.
- Concurrent Indicators:
See Lagging Indicators.
- Consumer Price Index (CPI):
A major inflation measure
computed by the U.S. Department of Commerce. It measures the change in
prices of a fixed market basket of some 385 goods and services in the
- Contract Grades:
See Deliverable Grades.
- Contract Month:
See Delivery Month.
- Controlled Account:
See Discretionary Account.
A term referring to cash and futures
prices tending to come together (i.e., the basis approaches zero) as
the futures contract nears expiration.
- Conversion Factor:
A factor used to equate the price
of T-bond and T-note futures contracts with the various cash T-bonds
and T-notes eligible for delivery. This factor is based on the
relationship of the cash-instrument coupon to the required 8 percent
deliverable grade of a futures contract as well as taking into account
the cash instrument's maturity or call.
- Cost of Carry (or Carry):
See Carrying Charge.
The interest rate on a debt instrument expressed in
terms of a percent on an annualized basis that the issuer guarantees
to pay the holder until maturity.
- Crop (Marketing) Year:
The time span from harvest to
harvest for agricultural commodities. The crop marketing year varies
slightly with each ag commodity, but it tends to begin at harvest and
end before the next year's harvest, e.g., the marketing year for
soybeans begins September 1 and ends August 31. The futures contract
month of November represents the first major new-crop marketing month,
and the contract month of July represents the last major old-crop
marketing month for soybeans.
- Crop Reports:
Reports compiled by the U.S. Department
of Agriculture on various ag commodities that are released throughout
the year. Information in the reports includes estimates on planted
acreage, yield, and expected production, as well as comparison of
production from previous years.
Hedging a cash commodity using a
different but related futures contract when there is no futures
contract for the cash commodity being hedged and the cash and futures
markets follow similar price trends (e.g., using soybean meal futures
to hedge fish meal).
- Crush Spread:
The purchase of soybean futures and the
simultaneous sale of soybean oil and meal futures. See Reverse Crush.
- Current Yield:
The ratio of the coupon to the current
market price of the debt instrument
- Customer Margin:
Within the futures industry,
financial guarantees required of both buyers and sellers of futures
contracts and sellers of options contracts to ensure fulfillment of
contract obligations. FCMs are responsible for overseeing customer
margin accounts. Margins are determined on the basis of market risk
and contract value. Also referred to as performance-bond margin. See