| Calendar Spread |
An option strategy involving the purchase and sale of two option contacts of the same type that have the same strike prices but different expiration dates. Also called a horizontal spread. In futures, another term for a bull or bear spread. |
| Call |
(1.) A period of time at the opening of all futures markets (and the close of some) when the price for each month is established by open outcry, one month at a time. The call will last as long as transactions are occurring in the market. (2.) An option contract giving the buyer the right, but not the obligation, to buy the underlying instrument at a fixed price (strike price) for a specified period of time which ends on the expiration date. |
| CARB Diesel |
Diesel fuel mandates by the California Air Resources Board including strict standards for sulfur and for low aromatics. |
| Carrying Charge |
The total cost of storing a physical commodity over a period of time. Includes storage fees, insurance, interest, and opportunity costs (lost opportunities on invested capital). |
| Cash Commodity |
The actual commodity; also known as the physical commodity. |
| Cash Market |
The actual trading of the physical commodity between individuals/entities using separate and unique contracts for each transaction. |
| Cash Settlement |
A method of delivering a futures contract by calculating the worth of the physical commodity represented by the contract and meeting both buyers and sellers obligations by an exchange of money instead of the physical commodity. |
| Casinghead Gas |
Gas present in an oil well that is removed when it flows to the surface at the wells casing. |
| Catalytic Cracking |
The refining process of breaking down heavier and more complex hydrocarbon molecules into simpler and lighter molecules. This is an effective method of maximizing gasoline yield from crude oil. |
| Cetane |
A measurement of the ignition quality of diesel fuel. Standard regular grade diesel has a cetane rating of 40 to 45. More premium blends have a cetane rating of 45 to 50. |
| CFD |
Cubic feet pre day. A measurement of the flow rate of natural gas either as it is produced at the well or transported via a pipeline. |
| CFTC |
Commodity Futures Trading Commission. The federal regulatory body charged with the supervision and oversight of futures trading and futures markets in the U.S. |
| Chartist |
Technical analyst or technician. One who uses price charts as a basis for trading. |
| CIF |
Cost, Insurance, Freight. Refers to a sale in which the buyer agrees to a unit price that includes the free on board (FOB) value at the place of origin, plus all costs of insurance and transportation to the desired destination. |
| Class (of Options) |
(1.) Options of the same type (either puts or call) covering the same underlying futures contract; e.g. a March CL call at a strike of $16.00 and a May CL call at a $17.00 strike. (2.) all the puts and calls on the same underlying instrument. |
| Clean Cargo |
All refined petroleum products except residual fuels (black oils). |
| Clearing |
The process by which a third party, (the clearing house), becomes the buyer to each seller of a contract and the seller to each buyer of a contract; thus assuming responsibility for protecting both buyer and seller from loss by assuring performance of each contract. |
| Clearing House |
An adjunct to a futures exchange by which trades executed on the floor of the exchange are settled (cleared). The body charged by the exchange with the function of insuring the financial integrity of each trade. (Also known as a Clearing Association). |
| Clearing Member |
A member or member firm of an exchange who has met additional requirements (capital based) to become a member of the clearing house and can accept trades executed on the floor of the exchange. The clearing member is responsible to the clearing house for the final performance of all contracts entered into by its customers. |
| Close |
A finite period of time at the end of each trading day during which the settlement price for each contract is determined. |
| Closing Range |
The high and low prices established during the close. |
| Commingling |
The intentional mixing of petroleum products or crude oil having similar specifications. |
| Commission |
The fee charged by a broker for his services. |
| Commission House |
A concern that buys and sells actual commodities or futures contracts for the accounts of customers for a fee known as a commission. (Also called FCM – futures commission merchant). |
| Commitment (Open Interest) |
The total number of contracts outstanding at any one time. The total number of long or shorts in the market. |
| Common Carrier |
An entity having state or federal authority to provide public transportation for a fee. |
| Contango |
(1.)A market situation in which the nearby months are at lower prices than the back months. (2.) A market whose prices between the front and back months reflects the cost of carrying the physical commodity in storage. (3.) A carrying charge market. |
| Contract |
(1.) A term describing a unit of trading for a commodity future or option. (2.) An agreement to buy or sell a specified commodity, detailing the amount and grade of the product and the date upon which the contract will mature and become deliverable. |
| Contract Grade |
The grade of a commodity established in a futures contract as being deliverable in satisfaction of said contract. |
| Contract Market |
(1.) An exchange designated by the CFTC to trade futures or options under the Commodity Exchange Act - also called an SRO or self regulatory organization. (2.) A commodity for which a futures contract has been approved for trading, as in “corn is a contract market”. |
| Contract Month |
The month specified by a futures contract for delivery. |
| Contract Unit |
The amount of the physical commodity represented in a futures contract. |
| Conversion |
A riskless option strategy involving a long futures, a long put, and a short call. The put and call have the same strike and expiration date. |
| Cover |
To close out a short futures position. |
| Covered Writing |
The sale of an option against a position in the underlying instrument. |
| CPO |
Commodity Pool Operator - an entity that runs the futures market version of a mutual fund. |
| Crack (or Crack Spread) |
The spread in dollars per barrel between crude oil and its refined products. Also known as refining margin. |
| Cross Trading |
The offsetting or the noncompetitive matching of the buy order of one customer against the sell order of another which is only permissible under specific rules and regulations established by the CFTC, the Commodity Exchange Act, and the contract market. |
| Cross-Hedge |
The use of a futures contract to hedge a commodity different than the contract grade specified in the futures contract, i.e., jet fuel versus heating oil. |
| Crude Petroleum |
A mixture of hydrocarbons that exists in a liquid state underground and remains a liquid when brought to the earth’s surface. |
| CTA |
Commodity Trading Advisor. |
| Cubic Foot |
The most common unit of measurement in the natural gas industry. A “cubic foot” is the amount of gas needed to fill the volume of one cubic foot at 14.73 pounds per square inch absolute pressure at 60 degrees Fahrenheit. One cubic foot of natural gas contains 1,031 Btu’s. |
| Curb Trading |
The trading that takes place after the market has officially closed. An unofficial (but sometimes necessary) process used to balance closing orders (especially close only and MOC’s) not executed during the close a process that is frequently abused by both brokers and customers and is a CFTC no no. |
