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The official price at the end of a trading session used to evaluate all open futures positions. Example usage: The settlement price is used for marking to market at the close of each trading day.

An investment strategy used to reduce risk by taking an offsetting position in related securities. Example usage: Farmers hedging against the risk of a bad harvest.

The number of shares or contracts traded in a security or an entire market during a given period of time. Example usage: A high trading volume in corn futures indicates active market interest.

A situation where the futures price of a commodity is higher than the spot price. Example usage: Crude oil futures may trade in contango if supply exceeds demand.

Engaging in a financial transaction that has a significant risk of losing value but also holds the expectation of a significant gain. Example usage: Buying oil futures hoping that the price will go up.

The simultaneous purchase and sale of the same asset in different markets to profit from unequal prices. Example usage: Buying a commodity in one market and selling it at a higher price in another.

The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price. Example usage: High liquidity in gold trading allows for large transactions without price disruption.

The daily settling of gains and losses due to changes in the market value of the security. Example usage: Futures contracts are marked to market to reflect gains and losses.

A legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future. Example usage: Hedging crop prices in agriculture.

The current market price at which an asset is bought or sold for immediate payment and delivery. Example usage: Buying oil for immediate delivery.

A market condition in which the future price of a commodity is lower than the spot price. Example usage: Wheat futures may enter backwardation during a shortage.

Collateral that the holder of a financial instrument has to deposit with a counterparty to cover some or all of the credit risk. Example usage: Putting down a margin payment to initiate a futures position.

A regulated market where commodities are traded. Example usage: The Chicago Mercantile Exchange (CME) where traders buy and sell commodity futures and options.

A basic good used in commerce that is interchangeable with other commodities of the same type. Example usage: Trading gold, oil, or wheat.