When an investor holds a position in both call and put options on the same asset. There are various types of combination spreads, including straddles and strangles.
The rate at which the gamma of an option or warrant will change over time. More specifically, it is the third order derivative of an options value - once to time and twice to the option's price. Color is part of the group of measures known as the "Greeks" (other measures include delta, gamma and vega) which are used in options pricing models. Color is used by investors who utilize a gamma-hedging option trading strategy, and provides the investor with information on the gamma of an option per year (the daily figure can be found by dividing the result by the number of days in the year). As the number of days left on the options contract get smaller and smaller, color becomes more volatile and less accurate.
A commodities exchange formed in 1979 for trading coffee, sugar and cocoa futures. The exchange has its roots in the 1882 Coffee Exchange, which added sugar in 1914 and cocoa in 1979. In 1998, the CSCE became a subsidiary of the New York Board of Trade, where it traded both futures and options. Since 2007, NYBOT has been a wholly-owned subsidiary of Intercontinental Exchange (ICE). The ICE operates several exchanges, trading platforms and clearing houses using an electronic trading platform. Coffee, sugar and cocoa are considered soft commodities because they are grown, not mined. Trading in soft commodities generally depends on supply and demand in markets just like hard commodity trading.
The actual amount of commodities represented by a single futures contract. Different futures contracts have different contract units and measurements. For example, soybean contracts have 5,000 bushels per contract, whereas soybean meal has 100 tons per contract.
The deliverable quantity of goods or commodities underlying futures, forward and option contracts. Each contract will have a well defined contract size. For example, most equity options have a contract size of 100 shares. So, if the option is exercised, 100 shares of the underlying company must be transferred between the option holder and writer.
Any board of trade designated to trade a specific options or futures contract. Basically it's another word for "designated exchange". For example, the Chicago Mercantile Exchange is a contract market for S&P 500 Index options and futures contracts.
When the futures price is above the expected future spot price. Consequently, the price will decline to the spot price before the delivery date. This is the opposite of backwardation.
Similar to a butterfly spread, a condor is an options strategy that also has a bear and a bull spread, except that the strike prices on the short call and short put are different. The purpose of this option strategy is to earn limited profits, regardless of market movements, with a small amount of risk.