Long Hedge Trading Positions - Floor Trader

More examples of long hedge and short hedge trading. Floor trading procedures and broker commodities formats, including CFTC.

The CFTC categories for reparations complaints include all of the following EXCEPT:


A) Summary decisional procedure
B) Forwarding decisional procedure
C) Formal decisional procedure
D) Voluntary decisional procedure

B: Forwarding decisional procedure is not a stated category by the CFTC regarding reparations.


An investor who is long corn and writes a corn futures contract has created a long hedge.

A) True
B) False

B: This is false. Long a commodity and short the future is a short hedge. The shorting of the contract is the hedge in this strategy. Buying a futures contract to go with a primary short position would be a long hedge.


A copy of the corporate resolution and corporate charter must be provided before a corporate account can begin trading.

A) True
B) False
A: All corporate new accounts must provide a copy of their corporate resolution and corporate charter.


Cash and futures prices on the same commodity will normally move in the same direction, based on changing economic indicators.

A) True
B) False

Correct answer is A: This is basically true. Negative or positive economic conditions will affect both in the same direction.

A person who is short a futures contract, and does not own the underlying commodity for the duration of the contract, could have an unlimited loss potential.

A) True
B) False


A: Since there is no offsetting position, this person could have an unlimited loss on the contract. The person does not have an established cost basis to make good on the contract.


Floor traders mainly trade for other trader customer accounts.

A) True
B) False

B: This is false. Floor traders normally trade for their own accounts. Floor brokers will trade for customers.


7. The cash market is also called the:

A) Futures market
B) Inverted market
C) Basis market
D) Spot market


D: The cash market is also referred to as the spot market. It can also be called the actual market as well.


premium basis occurs when futures prices are higher than cash prices.

A) True
B) False


B: This is false. A premium basis is when cash prices are higher than futures prices.


Position traders usually hold positions longer than one trading session or day.

A) True
B) False


A: This is true. Position traders will normally carry positions past one day. Day traders will normally close out positions in the same day or session.



Futures contracts do not have to trade only on futures exchanges.

A) True
B) False

B: This is false. Futures contracts must trade on designated futures exchanges.

Stockbroker Job