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Derivatives

  Derivatives   |   Terms
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  • January 6, 2023
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Trade Option

A commodity option transaction where the buyer is reasonably viewed by the seller (option writer) to be an end user of that commodity or a related commodity. In other words, the buyer is believed to be undertaking a business which involves the use of that commodity or a closely-related commodity as an input to its business operations.

For example, a trade option transaction could be established between a seller of options on oil and a buyer of such options, where the buyer is believed to be engaged in power generation.


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