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BOTCC Board of Trade Clearing Corporation.
BTX Brokertec Futures Exchange LLC
Back Months Those futures delivery months with expiration or delivery dates furthest into the future; futures delivery months other than the spot or nearby delivery month.
Backwardation A market in which futures prices are progressively lower in the distant delivery months; the opposite of Contango. See also Inverted Market.
Bad Faith Dishonesty or fraud in a transaction, such as entering into an agreement with no intention of ever living up to its terms, or knowingly misrepresenting the quality of something that is being bought or sold.
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.
Bar Chart A chart that graphs the high, low, and settlement prices for a specific trading session over a given period of time.
Basis The difference between the current cash price of a commodity and the futures price of the same commodity.
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 a 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 hedge position is established and the time that it is lifted.
Bear One who expects a decline in prices. The opposite of a Bull. A news item is considered bearish if it is expected to result in 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 does not materialize. In 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 not realized. This spread requires the simultaneous purchase and sale of options of the same class and expiration date but with different strike prices. For example, if call options are spread, the purchased option must have a higher exercise price than the option that is sold.
Beta A measure of the variability of rate of return or value of a stock portfolio compared to that of the overall market.
Bid An expression indicating a desire to buy a commodity at a given price; the opposite of Offer.
Black Scholes Model An option pricing formula initially developed by F. Black and M. Scholes for securities options and later refined by Black for options on futures.
Block Order A futures or option order placed at the same time for more than one account.
Board Order Also known as a Market-if-Touched (MIT) Order. An order that becomes a market order when a particular price is reached. A sell MIT is placed above the market; a buy MIT is placed below the market.
Board of Trade See Contract Market.
Board of Trade Clearing Corporation (BOTCC) An independent corporation that settles all trades made at the Chicago Board of Trade. The BOTCC acts as a guarantor for all trades cleared by it, reconciles all clearing member firm accounts each day to ensure that all gains have been credited and all losses have been collected, and sets and adjusts clearing member firm margins for changing market conditions. Also referred to as a Clearing Corporation. See also Clearing House.
Boiler Room A 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.
Book Entry Securities Electronically recorded securities that include each creditor's name, address, Social Security or tax identification number, and dollar amount loaned, (i.e., no certificates are issued to bond holders, instead the transfer agent electronically credits interest payments to each creditor's bank account on a designated date).
Booking the Basis A forward pricing sales arrangement in which the cash price is determined either by the buyer or the seller within a specified time. At that time, the previously agreed basis is applied to the then-current futures quotation.
Box Transaction An option position in which the holder establishes 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.
Branch Office Any location, other than the main business address of a registrant, at which the registrant employs persons engaged in activities requiring registration as an associated person.
Branch Office Manager The person at a branch office designated to supervise the activities of that office.
Break A rapid and sharp price decline.
Break Even Point The trading profit that a commodity pool must realize in the first year of a participant's investment to equal all fees and expenses such that such participant will recoup its initial investment.
Brief A written document that outlines a party's legal arguments in a case.
Broker A person paid a fee or commission for acting as an agent in making contracts, sales or purchases. In futures trading, the term may refer to (1) a floor broker--a person who actually executes orders on the trading floor of an exchange; or (2) an account executive or associated person--the person who deals with customers in the offices of a futures commission merchant or introducing broker; or (3) a futures commission merchant or introducing broker.
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.
Broker-Dealer Firms that act as securities dealers or brokers, or perform both functions. A broker is an individual or firm who acts as an intermediary between a buyer and seller, usually charging a commission. A dealer is any person or company in the business of buying and selling securities for his or her own account, through a broker or otherwise.
Brokerage Fee Also known as a Commission Fee. A fee charged by a broker for executing a transaction.
Brokerage House Also known as a Futures Commission Merchant. An individual or organization that solicits or accepts orders to buy or sell futures contracts or options on futures and accepts money or other assets from customers to support such orders. Also referred to as Commission House or Wire House.
Bucket Shop A brokerage enterprise which "books" (i.e., takes the opposite side of) a customer's order without actually having it executed on an exchange.
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.
Bull One who expects a rise in prices. The opposite of Bear. A news item is considered bullish if it expected to raise prices.
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 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 with different strike prices. For example, if call options are spread, the purchased option must have a lower exercise or strike price than the sold option.
Business Conduct Committee A committee empowered by a Self-Regulatory Organization to supervise the business conduct of the organization's members and, at some self-regulatory organizations, conduct investigations. A Business Conduct Committee may also issue formal Complaints, review settlement offers, conduct hearings and issue decisions.
Butterfly Spread A three-legged spread in futures or options. In the option spread, the options have the same expiration date but differ in strike prices. For example, a butterfly spread in soybean call options might consist of two short calls at a $6.00 strike price, one long call at a $6.50 strike price, and one long call at a $5.50 strike price.
Buy on Close To buy at the end of the trading session within the closing price range.
Buy on Opening To buy at the beginning of a trading session within the open price range.
Buyer A market participant who takes a long futures position or buys an option. An option buyer is also called a Taker, Holder or Owner.
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 previously prevailed.
Buying Hedge Hedging transaction in which futures contracts are bought to protect against possible increases in the cost of commodities. See also Long Hedge.