Finance Dictionary D

Futures: What does Daily Price Limits mean?

In the futures market, the daily price limits are the maximum and minimum prices at which a futures contract can trade. These limits are established by the clearinghouse. The clearinghouse calculate the daily price limits based on the settlement price of the previous trading day.


Futures: What does Daily Settlement mean?

For futures, the daily settlement is the process where the daily price changes are paid by the parties incurring losses to the parties making profits. This process is usually carried out through a clearinghouse.


Futures: What does Deferred Month mean?

The deferred month or months is the latter month or months of a futures contract.

Example: You purchase a three-month future. At the time of purchase, month two and three are the deferred months. When you have reached the second month of ownership, only the third month is the deferred month.


What does Day Order mean?

A day order is a purchase order or sell order that will be automatically canceled if it isn’t filled by the end of the day.


What does Day Trader mean?

A day trader is a trader engaged in day trading.


What does Day Trade mean?

Day trading involves buying and subsequently selling assets (such as financial instruments) within the same trading day. A day trader will typically close all positions before the market close of the trading day, rather than hold open positions overnight.

The object of day trading is usually to make a profit by exploiting miniscule price movements for highly liquid assets. Sometimes leverage is used to magnify the returns generated by these minor movements.


Options: What does Deferred Strike Option mean?

A deferred strike option is an option for which the exercise price is established at a future date based on a pre-agreed formula.


What does Delivery mean?

In finance, delivery is an action where an underlying asset (e.g. a security or commodity) covering a contract is tendered and received by the contract holder. Delivery occurs for contracts such as options, forwards and futures.


What does Delivery Month mean?

In finance, the delivery month is the calender month in which delivery is to be made for a contract, such as an options contract, forwards contract or futures contract.


What does Delivery Day mean?

In finance, the delivery day is the date on which delivery is to be made for a contract, such as an options contract, forwards contract or futures contract. On this day, the contract terminates.


What does Delivery Notice mean?

In finance, delivery notice is a written notice in which the holder of the short position in a contract (e.g. a futures contract) informs the clearing house of their intent to deliver a commodity for settlement. The delivery notice will typically also include details regarding the delivery, e.g. the grade in cases where the contract allow a range for the basis grade of underlying commodities.


What does Delivery Price mean?

In finance, delivery price is the financial value of the conveyance of the underlying commodities when a futures contract, forward contract or similar expires. The delivery price is set by a clearinghouse.

The term delivery price can also be used for a stock’s selling price in options contracts.

In forward contracts, the delivery price and the forward price are the same at the start of the contract. As time goes by, the forward price can go up and down, but the delivery price will remain the same as it was at the start of the contract.


Options: What does Delta mean?

Delta is the fourth letter in the Greek alphabet. In finance, delta refers to the relationship between the change in value of an option and the change in market price of the underlying asset. Delta measures the rate of change of the theoretical option value with respect to changes in the underlying asset’s price.


Options: What does Delta Hedge mean?

A delta hedge is an options hedge where the number of contracts is determined by the reciprocal of the option delta.


Options: What does Delta Neutral mean?

Delta neutral is an option position where delta is zero.


What does Derivatives mean?

In finance, derivatives are contracts that derive their value from the performance of an underlying asset (e.g. stocks, bonds or currency) or other entity (e.g. index or interest rate). The underlying entity of a derivative can be another derivative.

Examples of common derivatives are options, forwards, futures and swaps. Derivatives traded both over-the-counter (OTC) and on exchanges.


What does Dynamic Hedge mean?

Dynamic hedging is a strategy where you hedge an asset by selling futures in such a manner that the position is adjusted frequently to adapt to changes in the basis between the hedged asset and the price of the futures contract.