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Haircut (1) In determining whether assets meet capital requirements, a percentage reduction in the stated value of assets; (2) in computing the worth of assets deposited as collateral or margin, a reduction from market value.
Hand Held Terminal A small computer terminal used by floor brokers or traders on a board of trade to record trade information and transmit that information to the clearing organization.
Hearing A proceeding wherein evidence is taken for the purpose of determining an issue of fact and reaching a decision on the basis of that evidence. An Administrative Hearing may take place outside the judicial process, before officials who have been granted judicial authority expressly for the purpose of conducting such hearings.
Hearing Committee A committee empowered by a self-regulatory organization to review settlement offers, conduct hearings and issue decisions.
Hedge Ratio Ratio of the value of futures contracts purchased or sold to the value of the cash commodity being hedged, a computation necessary to minimize basis risk.
Hedger An individual or company owning or planning to own, or selling or planning to sell, a cash commodity and is concerned that the cost of the commodity may change before either buying or selling it in the cash market. A hedger achieves protection against changing cash prices by purchasing (selling) futures contracts of the same or similar commodity and later offsetting that position by selling (purchasing) futures contracts of the same quantity and type as the initial transaction.
Hedging The practice of offsetting the price inherent in any cash market position by taking the opposite position in the futures market. Hedgers use the market to protect their businesses from adverse price changes.
High The highest price of the day for a particular futures contract.
Hog Corn Ratio See Feed Ratio.
Holder See Option Buyer.
Horizontal Spread The purchase of either a call or put option and the simultaneous sale of the same type of option with typically the same strike price but with a different expiration month. Also referred to as a Calendar Spread.
Hypothetical Disclaimer Results of trading that was not actually executed in any account. For example, results of proposed trades generated by a trading system but not actually entered for execution.