The flashcards below were created by user
on FreezingBlue Flashcards.
who participates in futures markets?
person/firm that handles futures (and options) transactions
person/corporation involved in a business sense in the underlying commodity whose futures contract is being transacted
- professional trader, no direct involvement in underlying commodity but is hoping to profit from the risk-aversion of hedgers
- exploits price variability
risk management strategy that involves taking opposite positions in the futures and cash markets
a selling hedge
- begins by selling futures contracts now and buying the contracts later when the goods are sold in the spot market
- "short position" in futures market
- "long position" in cash market
a buying hedge
- begins with a person buying futures contracts now and selling the contracts later when the goods are purchased in the spot market
- "long position" in futures market
- "short position" in cash market