Commodities & Futures Trading Flashcards
7 cards from real CPT practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Commodities & Futures Trading flashcards as text
What is a 'calendar spread' in futures trading?
Answer: Simultaneously buying and selling futures contracts of the same commodity in different delivery months
A calendar spread involves buying a futures contract in one delivery month and simultaneously selling a contract for the same commodity in a different delivery month to profit from changes in the price differential.
The Commitment of Traders (COT) report is published by which organization?
Answer: Commodity Futures Trading Commission (CFTC)
The CFTC publishes the weekly COT report, which breaks down open interest by trader category (commercial, non-commercial, and non-reportable) to show market positioning.
In commodity markets, what is 'physical delivery'?
Answer: The actual transfer of the underlying commodity from seller to buyer upon contract expiration
Physical delivery means the seller actually delivers the specified quantity and grade of the commodity to the buyer at a designated location upon contract expiration.
What is 'position limit' in futures trading?
Answer: The maximum number of futures contracts a single trader can hold in a given commodity
Position limits are CFTC-mandated caps on the maximum number of futures contracts any single trader can hold to prevent market manipulation and excessive speculation.
Which exchange is the primary venue for WTI crude oil futures contracts?
Answer: New York Mercantile Exchange (NYMEX)
WTI (West Texas Intermediate) crude oil futures are primarily traded on NYMEX, now part of CME Group, under the ticker CL.
What is 'roll yield' in commodity futures investing?
Answer: The gain or loss from transitioning a futures position from an expiring contract to a new one
Roll yield is the profit or loss realized when closing an expiring futures contract and opening a new one in a further-dated month, affected by the shape of the futures curve (contango or backwardation).
A trader uses commodity futures to benefit from price differences between two related commodities (e.g., heating oil vs. crude oil). This strategy is called:
Answer: Inter-commodity spread trading
An inter-commodity spread involves simultaneously taking long and short positions in two related but different commodity futures to profit from changes in the price relationship between them.