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Clearing

The processes undertaken by a specialized corporation, called a clearinghouse, in order to facilitate securities transactions. That includes: validation, delivery...

Tailing Adjustment

An adjustment that is made to the number of futures contracts used in hedging a position in order to accommodate...

Open Trade Equity

The unrealized gain or loss on open positions in futures. That is, an OTE is the net of unrealized profits...

OTE

It stands for open trade equity; this refers to the unrealized gain or loss on open positions in futures. That...

Banging The Close

A manipulative or disruptive trading practice whereby a trader buys or sells a large quantity of futures contracts during the...

Asset Mismatch

A situation that arises when the risk associated an asset is to be hedged but there is no futures contract on that...

Linear Payoff

The payoff of a derivative contract that moves one-for-one with changes in the underlying price or rate. In general, derivatives subdivide into two common...

Futures

An exchange-traded contract (and a derivative) whereby the holder is under obligation to buy or sell a specific asset (security or commodity) for a predetermined...

Futures Contract

An exchange-traded contract (and a derivative) whereby the holder is under obligation to buy or sell a specific asset (security or commodity) for a predetermined...

Tail Hedge

An adjustment to the number of futures contracts used to hedge a position in an attempt to make the present market exposure...