Backpricing - Fixing the price of a commodity for which the commitment to purchase has been made in advance. The buyer can fix the price relative to any monthly or periodic delivery using the futures markets.

Backwardation - Market situation in which futures prices are progressively lower in the distant delivery months. When the prices of spot, or contracts maturing earlier are higher than a particular futures contract, it is said to be trading at Backwardation..

Banker's Acceptance - A draft, or bill of exchange, accepted by a bank where the accepting institution guarantees payment. Used extensively in foreign trade transactions.

Basis - The difference between the spot or cash price of a commodity and the price of the nearest futures contract for the same or a related commodity. Basis is usually computed in relation to the futures contract next to expire and may reflect different time periods, product forms, qualifies, or locations.

Basis Grade - The grade of a commodity used as the standard, or par grade of a futures contract.

Basis Point - The measurement of a change in the yield of a debt security. One basis point equals 1/100 of one percent.

Basis Quote - Offer or sale of a cash commodity in terms of the difference above or below a futures price (e.g., 10 cents over December corn).

Basis Risk - The risk associated with an unexpected widening or narrowing of basis between the time a hedging position is established and the time that it is lifted.

Bear - One who expects a decline in prices. The opposite of "bull." A news item is considered bearish if it is expected to bring lower prices.

Bear Market - A market in which prices are declining.

Bear Spread - The simultaneous purchase and sale of two futures contracts in the same or related commodities with the intention of profiting from a decline in prices but at the same time limiting the potential loss if this expectation is wrong. In the agricultural products, this is accomplished by selling a nearby delivery and buying a deferred delivery.

Bear Vertical Spread - A strategy employed when an investor expects a decline in a commodity price but at the same time seeks to limit the potential loss if this expectation is wrong. This Spread requires the simultaneous purchase and sale of options of the same class and expiration date but different strike prices. For example, if call options are spread, the purchased option must have a higher exercise price than the sold option.

Beta (Beta Coefficient) - A measure of the variability of rate of return or value of a stock or portfolio compared to that of the overall market.

Bid - An offer to buy a specific quantity of a commodity at a stated price.

Blackboard Trading - The practice of selling commodities from a blackboard on a wall of a commodity exchange.

Black-Scholes Model - An option pricing formula initially derived by F. Black and M. Scholes for securities options and later refined by Black for options on futures.

Board Broker System - A system of trading in which an individual member of an exchange (or a nominee of the member) is designated as a Board Broker for a particular commodity with the responsibility of executing orders left with him by other members on the floor, providing price quotations, and maintaining orderliness in the trading crowd. A Board Broker may not trade for his own account or the account of an affiliated organization. Also see Free Crowd System and Specialist System.

Board Order - See Market-if -Touched Order.

Board of Trade - Any exchange or association, whether incorporated or unincorporated, 6f persons who are engaged in the business of buying or selling any commodity or receiving the same for sale on consignment

Boiler Room - An enterprise which often is operated out of inexpensive, low-rent quarters (hence the term "boiler room") that uses high-pressure sales tactics (generally over the telephone) and possibly false or misleading information to solicit generally unsophisticated investors.

Booking the Basis - A forward pricing sales arrangement in which the cash price is determined either by the buyer or seller within a specified time. At that time, the previously agreed basis is applied to the then-current futures quotation.

Book Transfer - A series of accounting or bookkeeping entries used to settle a series of cash market transactions.

Box Transaction - An option position in which the holder has established a long call and a short put at one strike price and a short call and a long put at another strike price, all of which are in the same contract month in the same commodity.

Break - A rapid and sharp price decline.

Broker - A person paid a fee or commission for executing buy or sell orders of a customer. In commodity futures trading, the term may refer to: (1) Floor Broker –a person who actually executes orders on the trading floor of an exchange; (2) Account Executive, Associated Person, Registered Commodity Representative or Customer's Man - the person who deals with customers in the offices of futures commission merchants; and (3) the Futures Commission Merchant.

Broker Association - Two or more exchange members who (1) share responsibility for executing customer orders, (2) have access to each other's unfilled customer orders as a result of common employment or other types of relationships, or (3) share profits or losses associated with their brokerage or trading activity.

Bucketing -Directly or indirectly taking the opposite side of a customer's order into the broker's own account or into an account in which the broker has an interest without open and competitive execution of the order on an exchange.

Bucket Shop - A brokerage enterprise which "hooks" (i.e. takes the opposite side of) a customer's order without actually having it executed on an exchange.

Bulge - A rapid advance in prices.

Bull - One who expects a rise in prices. The opposite of "bear". A news item is considered bullish if it portends higher prices.

Bullion - Bars or ingots of precious metals, usually cast in standardized sizes.

Bull Market - A market in which prices are rising.

Bull Spread - The simultaneous purchase and sale of two futures contracts in the same or related commodities with the intention of profiting from a rise in prices but at the same time limiting the potential loss if this expectation is 'wrong. In the agricultural commodities, this is accomplished by buying the nearby delivery and selling the deferred.

Bull Vertical Spread - A strategy used when an investor expects that the price of a commodity will go up but at the same time seeks to limit the potential loss should this judgment be in error. This strategy involves the simultaneous purchase and sale of options of the same class and expiration date but different strike prices. For example, if call options are spread, the purchased option must have a lower exercise price than the sold option.

Buoyant - A market in which prices have a tendency to rise easily with a considerable show of strength.

Buyer - A market participant who takes a long future position or buys an option. An option buyer is also called a taker, holder, or owner.

Buyer's Call - See Call.

Buyer's Market - A condition of the market in which there is an abundance of goods available and hence buyers can afford to be selective and may be able to buy at less than the price that had previously prevailed. See Seller's Market.

Buying Hedge (or Long Hedge) - Hedging transaction in which futures contracts are bought to protect against possible increased cost of commodities. See Hedging.

Buy (or Sell) On Close - To buy (or sell) at the end of the trading session within the closing price range.

Buy (or Sell) On Opening - To buy (or sell) at the beginning of a trading session within the opening price range.