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Finance GlossaryCash Commodity
Cash Commodity
Definition of Cash Commodity
A cash commodity refers to physical goods like aluminium, cotton, gold, silver, zinc, and other tangible goods which are delivered to a trader or company most commonly after exercising derivatives like options and futures contracts.
Cash commodities are also known as actuals. A derivative contract for cash commodities will explicitly state the delivery date, price, and quantity. These details are necessary as some contracts may not involve the delivery of goods.
Cash commodities are also known as actuals. A derivative contract for cash commodities will explicitly state the delivery date, price, and quantity. These details are necessary as some contracts may not involve the delivery of goods.
Related Terms
Runaway Gap
A runway gap or a continuation gap sometimes appears in the middle of a strong price trend. It reflects that the stock price is gaining sustained momentum. Often, these gaps show up when traders rush in. As a result, the prices can move sharply higher or lower. A runaway gap sends a strong signal to those who follow trends. It confirms the strength in price and suggests that the healthy momentum may continue for some time.
Market Depth
The number of buy and sell orders available at different price levels for a stock denotes its Market Depth. It helps traders understand supply and demand in the market. Strong market depth means there are many buyers and sellers, making it easier to enter or exit trades without causing large price changes.
Tracking Error
Tracking error measures how closely a portfolio or fund follows the performance of its benchmark index. It represents the volatility of the difference between fund returns and benchmark returns. A lower tracking error indicates closer alignment, while a higher tracking error suggests greater deviation due to costs, strategy, or holdings.
Positional Trading
Positional Trading is a trading strategy where a trader keeps their position (long or short) for weeks to months. Unlike intraday trading or swing trading, positional traders do not pay attention to minor price fluctuations and focus on fundamental analysis, economic trends, and long-term technical patterns to predict the overall direction of a security. This strategy is less time-intensive and is often preferred by traders who are looking to capture major moves in the market with lower transaction costs.
Notional Value
Notional Value refers to the total value of an underlying asset represented by a financial contract, such as derivatives or futures. It is used to calculate exposure and risk, even though the actual amount invested or exchanged may be much smaller than the notional value itself.
Consumer Price Index
The Consumer Price Index (CPI) measures how costly goods and services have become over time. It is calculated by measuring the weighted average of the percentage change in the price of a basket of goods and services.
If the CPI increases, it means that inflation is on the rise. In India, the CPI replaced Whosale Price Index (WPI) as the primary measure of inflation in 2013.
If the CPI increases, it means that inflation is on the rise. In India, the CPI replaced Whosale Price Index (WPI) as the primary measure of inflation in 2013.
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