Capital Asset Pricing Model (CAPM)

A model relating the expected return on an asset to its beta.

Call Option
A contract that gives the buyer the right to take delivery of an asset (eg commodity, share, foreign currency) at some point in future at a set price (known as the "strike price") from the seller (see also options).

Carry Forward
If, in a given year, the buyer has taken more gas than the annual contract quantity the buyer can carry forward this excess for future use. The buyer may use this to offset the take-or-pay obligation though there is often a limit on the amount of carry forward allowed in any given contract period.

Cash and Carry
A trading strategy which involves buying a physical instrument and later delivering it against a sold futures contract

Cash Commodity

To differentiate an underlying asset from its associated futures or forward contract, the underlying asset may be referred to as a "cash" (or "spot") commodity. This term is not unique to commodity markets, physical 10 year bonds are referred to as a cash or spot commodity.

Cash Settlement
A procedure for settling a futures contract in cash rather than delivering the underlying asset.

Cash flow Mapping
A procedure for calculating value at risk by representing an instrument as a portfolio of zero coupon bonds.

Cost, Insurance and Freight - a price for a material which covers not only the basic cost of the material at source, but also the cost of delivery to destination and insurance during the journey. Sometimes insurance is omitted, resulting in a "C&F" price.  Delivery may be expressed as "for shipment", in which case the quantity sold is that loaded, or "delivered", in which case the quantity actually delivered (i.e. net of transportation losses) applies. (See also "FOB)

Clearing House
A firm that guarantees the performance of the parties in an exchange traded derivatives transaction.

Coking Coal
Coal used for producing blast furnace, or foundry coke by carbonisation

An options strategy. An out-the-money call/put option is written to cover the cost of buying an out-the-money put/call option. For example, an oil producer may buy a call option with a strike of US$20 / bbl


New York Commodity Exchange now affiliated with NYMEX


The condensed liquids associated with hydrocarbon gas fields

Description of a market in which the future price of a commodity is higher than the spot price (see also backwardation).

The degree to which two variables are related. A correlation coefficient of 1 is perfect, while no correlation has a value of zero.

Credit Risk

The risk that a loss will be incurred on a transaction due to a default by the counter party (see also settlement risk).

Crude Oil
Oil in its raw state, not yet subjected to refining or chemical processes

Chemical symbol for Copper

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