| Back months |
The futures or options on futures months being traded that are furthest from expiration. Also called deferred or distant months. |
| Backbone |
Network used to interconnect several networks together. |
| Backspreads |
Selling one or more at-the-money options and buying a larger number of out-of-the-money options. Backspreads may generate trading profits if implied volatility increases and/or the underlying instrument’s price moves sufficiently in the anticipated direction. |
| Balance of trade |
The difference between a country's imports and exports. |
| Bar chart |
A graph of prices, volume and open interest for a specified time period used by the chartist to forecast market trends. For example, a daily bar chart plots each trading session's high, low and settlement prices. |
| Base Currency |
Currency being traded and expressed first in a direct quotation. |
| Basis |
The difference between the spot or cash price and the futures price of the same or a related commodity. Basis is usually computed to the near future, and may represent different time periods, product forms, qualities and locations. The local cash market price minus the price of the nearby futures contract. |
| Basis contract |
A forward contract in which the cash price is based on the basis relating to a specified futures contract. |
| Basis Point |
One-hundredth (.01) of a full index point. |
| Bear |
One who believes prices will move lower. |
| Bear market |
A market in which prices are declining. |
| Bear spread |
A vertical spread involving the sale of the lower strike call and the purchase of the higher strike call, called a bear call spread. Also, a vertical spread involving the sale of the lower strike put and the purchase of the higher strike put, called a bear put spread. |
| Bearish key reversal |
In technical analysis, a chart formation that signals a reversal of the current upward trend and the possible beginning of a downtrend. |
| Beta |
The relationship between the movement of an individual stock or a portfolio and that of the overall stock market. |
| Beta test |
Pre-release testing of software involving end-users. |
| Bid |
The price that the market participants are willing to pay. |
| Bid (or buy) |
An offer to buy a specific quantity of a commodity at a stated price. The price that the market participants are willing to pay. |
| Bid/ask spread |
The price difference between the bid and offer price. |
| Block Trade |
A privately negotiated futures transaction executed apart from public auction market, either on or off the exchange trading floor. There are minimum order size requirements that vary according to product and order type, and eligibility for engaging in such trades is strictly regulated. Block Trades can only be negotiated with futures, options on futures, and CBOT swap trades (excludes all other basis trades). |
| Blowoff volume |
An extraordinarily high volume trading session occurring suddenly in an uptrend, signaling the end of the trend. |
| Board |
The Board of Directors of the exchange, or any other body acting in lieu of and with the authority of the Board. |
| Board Trading |
Futures trading recorded on boards rather than conducted in the pit. |
| Bond |
Instrument traded on the cash market representing a debt of the government or of a company. |
| Book |
A summary of a trader's or desk's outstanding positions. |
| Breakaway gap |
A gap in prices that signals the end of a price pattern and the beginning of an important market move. |
| Breakeven |
The point at which an option buyer or seller experiences no loss and no profit on an option. Call breakeven equals the strike price plus the premium; put breakeven equals the strike price minus the premium. |
| Bretton Woods Agreement of 1944 |
An agreement that established fixed-rate trading bands for the world's major foreign currencies. The agreement also provided for central bank currency market intervention and tied the price of the U.S. dollar to gold at $35 per ounce. The agreement collapsed in 1971, when President Nixon devalued the dollar and allowed the major currencies to "float" on the world market. |
| Broad Based Index Future |
Refers to a futures contract based upon an index that is not considered narrow-based as defined in Section 1a(25) of the Commodity Exchange Act (CEA). Also referred to as a Non-Narrow Based Index Future. |
| Broker |
A person paid a fee or commission for executing the buy or sell orders of a customer. In futures trading, the term may refer to one of several entities:Floor broker - a person who actually executes the trade in the trading pit or electronically;Account executive (AE), Associated Person (AP), or Registered Commodity representative (RCR) - the person who deals with customers in Futures Commission Merchant (FCM) offices; andFCM - a firm or person engaged in executing orders to buy or sell futures contracts for customers.A full-service broker offers market information and advice to assist the customer in trading. A discount broker simply executes orders for customers. |
| Broker symbol |
Initials that identify a broker. |
| Brokerage |
The fee paid to a floor broker for executing orders. May be a flat amount or a percentage; also referred to as a commission. |
| Brokerage house |
A firm that handles orders to buy and sell futures and options contracts for customers. |
| Bull |
One who expects prices to rise. |
| Bull Market |
A market in which prices are rising. |
| Bull spread |
A vertical spread involving the purchase of the lower strike call and the sale of the higher strike call, called a bull call spread. Also, a vertical spread involving the purchase of the lower strike put and the sale of the higher strike put, called a bull put spread. |
| Bullish Key Reversal |
In technical analysis, a chart formation that signals a reversal of the current downward trend and the possible beginning of an uptrend. |
| Bunched Account Trade |
An order which a clearing firm later allocates to more than one account, either within the same firm or among other firms, according to a pre established trade allocation scheme. |
| Bundle |
The simultaneous sale or purchase of one each of a series of consecutive futures contracts. Bundles provide a readily available, widely accepted method for executing multiple futures contracts with a single transaction. |
| Business Day/Trading Day |
Any day on which the exchange is open for trading or deliveries. Trading hours for CME are in the following categories, and Regular Trading Hours (RTH) are: 7:20 to 14:00 CST for CME Interest Rate and CME FX Products, 8:45 to 13:40 or 15:15 for CME Equity Products, 9:00 to 13:12 various times for CME Commodity Products, 8:00 to 15:15 for CME Environmental Products. |
| Butterfly spread |
A three-legged option spread in which each leg has the same expiration date but different strike prices. |
| Buy on close |
To buy at the end of a trading session at a price within the closing range. |
| Buy on opening |
To buy at the beginning of a trading session at a price within the opening range. |
| By-Laws |
The By-Laws of CME unless otherwise specified. |