A sampling of terms defined includes: active premium, aggregation, angel financing, asset allocation, backwardation, benchmark, bridge loan, capital structure arbitrage, coefficient of determination, commodity option, convertible arbitrage, deferred futures, discretionary trading, distressed debt, enumerated agricultural commodities, extrinsic value, follow-on funding, hedge ratio, interdelivery spread, long short equity, modified value-at-risk, offshore fund, piggyback registration, social entrepreneurship, systematic trading, tracking error, underlying futures contract
, venture capital method, and weather premium.
A $150 call option gives the buyer the right but not the obligation to buy the underlying futures contract
at $150 a barrel.
The option will only be exercised if price movements are favorable to the option buyer, that is, if the underlying futures contract
would be profitable.
An option on a futures contract derives its value from the underlying futures contract
, which in turn derives its value from the underlying cash, thus the name double derivative.
Options require less initial cash outlay than buying the underlying futures contract
would, but they can be much more volatile.
Also traded at the exchange are options that give the right, but not the obligation, to buy or sell an underlying futures contract
Assuming that all options are carried to expiration (no early exercise), a trader who buys the call and sells the put can always expect to end up with a long position in the underlying futures contract
naked option writing--selling an option without owning the underlying futures contract
All the underlying Indices are rolling Indices, each of which rolls on a daily basis according to a pre-determined schedule that has the effect of keeping constant the weighted average maturity of the underlying futures contracts
Teucrium designs investment vehicles that include transparency via the intraday indicative value (IIV), a publicly published valuation of the fund's holdings provided by the NYSE, updated every 15 seconds as the underlying futures contracts
trade throughout the day.
Adjusted Margin is a financial measure intended to approximate the margin results that would have been reported in a particular period had the Company's underlying futures contracts
related to its fixed price and price cap contracts qualified for hedge accounting under SFAS No.
However, from time to time, Clean Energy has sold these underlying futures contracts
when it believed natural gas prices were going to fall.