Glossary - C

CABLE
Cable is a term used to refer to the Sterling/US Dollar exchange rate. The term "Cable'" was coined in the mid 1800s. The Sterling/US Dollar rate was transmitted between the London and New York exchanges via the transatlantic telegraph "cable'", hence the term "Cable'".
 
CALL OPTION
A call option is a financial contract between two parties. The buyer of the call option has the right but not the obligation to buy an agreed quantity of a particular financial product or commodity from the seller of the option at a certain time (the expiration date) for a certain price (the strike price). The seller is obligated to sell the commodity or financial instrument should the buyer so decide. The buyer pays a fee (called a premium) for this right.
 
CANDLE CHART
This is a style of bar-chart used primarily to describe price movements of a security, derivative, or currency over time. It is a combination of a line-chart and a bar-chart, in that each bar represents the range of price movement over a given time interval.
 
CAPITAL
Capital consists of any produced asset that can enhance a person's power to perform economically useful work.
 
CARRY TRADE
Occurs when a low yielding currency is borrowed and is subsequently invested in a higher yielding currency.
 
CASH PRICE
Current market price of the actual physical product. Also known as spot price in the currency market.
 
CHARTIST
Market participant who relies on charts for his signals.
 
COMEX
The primary market for trading metals such as gold, silver, copper and aluminum. Formerly known as the Commodity Exchange Inc. COMEX merged with the New York Mercantile exchange in 1994 and became the division responsible for metals trading.
The merger created the world's largest physical futures trading exchange.
 
COMMITMENT OF TRADERS (COT)
This is a weekly report issued every Friday by the Commodity Futures Trading Commission collating the holdings of participants in various futures markets.
 
COMMODITY
In economics, a commodity is the generic term for any marketable item produced to satisfy user requirements.
 
COMMODITY RESEARCH BUREAU INDEX (CRB)
The CRB is index that measures the overall direction of commodity sectors. It is designed to reveal the directional movement of prices in overall commodity trades.
 
CFTC
Commodity and Futures Trading Commission. Regulatory body for the futures industry in America.
 
CONSOLIDATION
A price pattern characterized by extended sideways movement.
 
CPI
The Consumer Price Index is a measure of the average change in price over a year in a given basket of goods typically representing an average family. It is the main inflation statistic.
 
CONSUMPTION
Income that is spent and not used for savings.
 
CONTRACT FOR DIFFERENCE
A Contract for difference (or CFD) is a contract between two parties, stipulating that the buyer will pay to the seller the difference between the current value of an asset and its value at contract time. (If the difference is negative, then the seller pays to the buyer.) In effect CFDs are financial derivatives that allow traders to take advantage of prices moving up (long positions) or prices moving down (short positions) on underlying financial instruments and are often used to speculate on those markets.
 
CONTRACT MONTH
The month in which a futures contract must be settled. Also known as the delivery month.
 
CONTRARY OPINION
The general theory that one can profit by doing the opposite of market consensus. It implies that if most market participants are bullish and hence already invested the path of least resistance is down.
 
CONTROLLED RISK TRADE
A trade which has a strict limited maximum loss.
 
COST OF CARRY
The cost of carry is the cost of "carrying" or holding a position. If long, the cost of carry is the cost of interest paid on a margin account. Conversely, if short, the cost of carry is the cost of paying dividends.
 
COUNTER CURRENCY
The counter currency is the second currency in any currency pair. Its value is determined against the base currency'"s value. For example, in the following currency pair EUR/USD, the counter currency is USD.
 
COUNTER-PARTY
Any person (natural person, legal person) entering a contract on the opposite side of the transaction. Each transaction must have counterparty or else the transaction cannot be executed. Counterparty can refer to brokers, investment banks, and other securities dealers that serve as the contracting party when completing "over the counter" transactions.
 
CREDIT DEFAULT SWAP (CDS)
A credit default swap  is an agreement that the seller of the CDS will compensate the buyer in the event of a loan default. The buyer of the CDS makes a series of payments to the seller and, in exchange, receives a payoff if the loan defaults. It is an insurance policy.
 
CROSS RATE
A price quote consisting of any currency quoted against a currency that is not the USD. The quote is made up of the individual exchange rates of the two currencies against the USD.
 
CURRENCY
Currency refers to a generally accepted medium of exchange. These are usually the coins and bank notes of a particular country.