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Finance GlossaryBack Months
Back Months
Definition of Back Months
“Back months” is used to refer to futures contracts that have a delivery date that’s due far into the future. Back months is generally known to be a popular term in commodity trading.
Related Terms
Exponential Moving Average
Exponential Moving Average (EMA) is a technical indicator used to follow price trends over a specific period of time. EMA assigns more weight to recent prices than older prices. The formula to calculate EMA is:
Exponential Moving Average = (K x (CP - PP)) + PP
C: Current Price of stock, currency, commodity, etc. P: The EMA of preceding periods K: Exponential smoothing constant
A Simple Moving Average (SMA) is used to calculate the value of the first period. Furthermore, the EMA can be used to identify support and resistance areas. However, it may not be optimal for identifying precise entry and exit points.
Exponential Moving Average = (K x (CP - PP)) + PP
C: Current Price of stock, currency, commodity, etc. P: The EMA of preceding periods K: Exponential smoothing constant
A Simple Moving Average (SMA) is used to calculate the value of the first period. Furthermore, the EMA can be used to identify support and resistance areas. However, it may not be optimal for identifying precise entry and exit points.
Over-the-Counter (OTC)
Over-the-Counter (OTC) refers to a decentralised marketplace wherein financial instruments are traded directly between two parties without the supervision of a formal exchange, such as NSE or BSE. This trading is done through a dealer network (broker-dealers) over the phone or electronically. The OTC market is less regulated and less transparent than exchange-traded markets and frequently involves customised agreements between institutions.
Out of the Money (OTM)
An option contract is said to be out of the money (OTM) if it would not be profitable to exercise the contract immediately. Options with no intrinsic value; call options with a strike price higher than the current market price, or put options with a strike price lower than the market price. OTM options are less expensive than ITM options. Indian F&O traders often purchase OTM options for leveraged bets, though they expire worthless if the market doesn't move favourably.
Commodity Spread Straddle
A commodity spread straddle or simply a commodity straddle is an options trading strategy where a trader will buy call and put options with the same strike price and expiration date.
The goal of a commodity straddle is to create a neutral strategy that wins in the event that the underlying security’s price rises or falls. That said, the profits must be higher than the total premium paid for the options.
The goal of a commodity straddle is to create a neutral strategy that wins in the event that the underlying security’s price rises or falls. That said, the profits must be higher than the total premium paid for the options.
Forward Market
The forward market is a place where forward contracts are traded. A forward is an over-the-counter derivative that carries a pre-agreed expiration date and price on which the contract must be exercised. It carries a right and an obligation.
Forwards are similar to futures but there is one major difference - forwards are unregulated instruments. Any entity writing a forward contract can customize the lot size and other details to fit their needs.
The forward market, as a whole, is an unregulated market whose typical participants include banks, vendors, and other large financial players.
Forwards are similar to futures but there is one major difference - forwards are unregulated instruments. Any entity writing a forward contract can customize the lot size and other details to fit their needs.
The forward market, as a whole, is an unregulated market whose typical participants include banks, vendors, and other large financial players.
Book Value
Book value of an asset is what you get by subtracting its accumulated depreciation from the original cost of the asset.
That’s why book value is referred to as the Net Asset Value (NAV) in the UK.
For a company, the book value is its total assets subtracted by liabilities, intangible assets and/or goodwill.
That’s why book value is referred to as the Net Asset Value (NAV) in the UK.
For a company, the book value is its total assets subtracted by liabilities, intangible assets and/or goodwill.
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