Futures Markets Terminology

Volume and Open Interest  

Volume and Open Interest are two frequently cited terms you will hear in futures markets terminology. They help to gauge the level of commercial activity in a market.

Each unit of volume represents a contract traded, and that includes the long and the short side of the trade. It's typically quoted on a daily basis.

On the other hand, open interest refers to the number of futures positions that remain open, or unliquidated, at the close of each trading session.

For instance, let's assume that you buy 10 contracts and sell 7 of them back to the market before the end of the trading day. Your trades add 17 contracts to that day's total volume figure. But since you're still holding 3 contracts which remain unliquidated, open interest in the market have increased by 3 contracts to the day's total open interest figure.


The Tick

A tick is the smallest increment of change allowable in the price of a commodity. The term is a throwback from to the days when ticker tapes were used to communicate prices. Commodity markets have different minimum tick sizes.

For instance, grains have a minimum tick size of 1/4 of 1 cent. This translates into a $12.50 move on CBOT contracts ($0.0025 times 5,000 bushels). Therefore, if you're quoted a two-tick move, this means a $25.00 move on this contract.

In addition, tick sizes, as well as contract sizes, may vary with each exchange. For example, the Mid American Exchange (MidAm) trades corn in 1000 bushel contracts, with a tick size of 1/8 of 1 cent. So one MidAm tick move represents $1.25 ($0.00125 times 1000 bushels).

Interpreting Price Quotations 

The different commodity contracts have different delivery abbreviations. You must familiarize yourself with these one-letter month codes in order to accurately identify the price.

One-Letter Month Codes


JAN                       F                                 D

FEB                       G                                 E

MAR                      H                                 I

APR                       J                                 L

MAY                       K                                O

JUN                       M                                P

JUL                       N                                T

AUG                      Q                                R

SEP                       U                                B

OCT                       V                                C

NOV                      X                                W

DEC                       Z                                Y




Futures Abbreviations

LC     Live Cattle      Cents per pound
FC     Feeder Cattle  Cents per pound    
LH    Live Hogs        Cents per pound
PB     Pork Bellies     Cents per pound


W    Wheat               Dollars per bushel
C     Corn                  Dollars per bushel
    Oats                  Dollars per bushel
     Soybeans           Dollars per bushel
SM    Soybean Meal    Dollar per ton
SO    Soybean Oil       Dollar per pound

SL     Silver           Dollars per ounce
GC    Gold             Dollars per ounce
HG    Copper         Cents per pound
PL     Platinum       Cents per pound
PA     Palladium     Cents per pound
AL    Aluminum      Cents per pound

HO    NY Heating Oil               Cents p/gallon
HV    NY Unleaded Gas            Cents p/gallon    
CL    Light Crude Petroleum     Dollars per barrel

LB     Lumber           Dollars per 1000 bd. ft.
KC    Coffee             Cents per pound
CC    Cocoa              Dollars per ton
SB     Sugar               Cents per pound
CT    Cotton              Cents per pound
OJ    Orange Juice     Cents per pound


With this information, you should be in a good position to read most any quote system. For example, the following is a typical stream of quotes from a price quotation service, containing three different quotes for three different commodity markets:
    LC 6658 Q        C 190 N       GC 3849 Y

This is telling us that:
1) August Live Cattle is currently trading at 66.58 cents a pound (LC 6658 Q)
2) July Corn is trading at $1.90 per bushel (
 C 190 N)
3) Next year's December Gold is currently trading at $384.90 per ounce (
GC 3849 Y)

Reading Commodities Futures Prices

Whether online or on the business section of national and local newspapers, you'll find published futures prices with volume and open interests. For example,  the following chart is for wheat traded at the CBOT:

Wheat (CBOT) – 5,000 bu minimum – dollars per bushel
Estimated volume 11,000   16,950 open interests

      SEASON                 OPEN
HIGH        LOW                                        OPEN   HIGH   LOW   SETTLE

6.32        3.74     SEP          5,174               4.45       4.48     4.42       4.465 

6.3250     3.63     DEC        42,616              4.47       4.47     4.40       4.45

6.18          3.95    MAR       10,630              4.45       4.46     4.42       4.43

5.47          4.16    MAY            579              3.94       3.99      3.93      3.95

4.65          3.70    JUL           3,938              3.93       3.94      3.93      3.935

4.10          3.04    SEP               43               4.01       4.01      3.97      4.00

4.66          3.98    DEC              84               3.94       3.98      3.93      3.97

3.96          3.65    JUL               44               3.90       3.94      3.90      3.92




Explanation of this chart is as follows:

Season High/Low   = These two columns display the highest and lowest prices ever reached for each delivery month since the contract began trading.

Open Interest          = The total outstanding positions for each contract month.

Open                      = The opening price at which the first bids and offers were made
                                and the first
transactions were completed.

High                       = The top price at which a contract was traded during the trading

Low                       = The lowest price at which a contract was traded during the trading

Settle                      = The official daily closing price


Next: Basics of Trading Commodities