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EFP
See Exchange of Futures for Physicals.

Electronic Trader
A person who is authorized to enter orders for his own account and/or for customers’ accounts on an Exchange’s electronic trading system.

End-User
The ultimate consumer of petroleum products or natural gas; most commonly refers to large commercial, industrial, or utility consumers.

European Option
An option that may be exercised only on its expiration date.

Exchange of Futures for Physicals
A futures contract provision involving an agreement for delivery of physical product that does not necessarily conform to contract specifications in all terms from one market participant to another and a concomitant assumption of equal and opposite futures positions by the same participants at the time of the agreement.

Exercise
The process of converting an options contract into a futures position.

Exercise Price
The price at which the underlying futures contract will be bought or sold in the event an options contract is exercised. Also called the Strike Price.

Expiration Date
The date and time after which trading in an options contract terminates, and after which all contract rights or obligations become null and void.

Extrinsic Value
The amount by which the premium exceeds its intrinsic value. Also known as time value.

Fair Value
Theoretical value.

Feedstock
The supply of crude oil, natural gas liquids, or natural gas to a refinery or petrochemical plant or the supply of some refined fraction of intermediate product to some other manufacturing process.

Fence
A long (short) underlying position together with a long (short) out-of-the-money put and a short (long) out-of- the-money call. All options must expire at the same time.

Fill
The price at which an order is executed.

Fill-Or-Kill
An order which must be filled immediately, and in its entirety. Failing this, the order will be cancelled.

Floor
A supply contract between a buyer and seller of a commodity, whereby the seller is assured that he will receive at least some minimum price. This type of contract is analogous to a put option.

Force Majeure
A standard clause which indemnifies either or both parties to a transaction whenever events which the Exchange declares to be reasonably beyond the control of either party occur to prevent fulfillment of the terms of the contract.

Forward Contract
A supply contract between a buyer and seller, whereby the buyer is obligated to take delivery and the seller is obligated to provide delivery of a fixed amount of a commodity at a predetermined price on a specified future date. Payment in full is due at the time of, or following,
delivery. This differs from a futures contract where settlement is made daily, resulting in partial payment over the life of the contract.

Free on Board (FOB)
A transaction in which the seller provides a commodity at an agreed unit price, at a specified loading point within a specified period; it is the responsibility of the buyer to arrange for transportation and insurance.

Front Months
Depending on the commodity, each of which
tends to have its own level of trading activity, front
months may refer to any of the first few contract months.

Fuel Oil
Refined petroleum products used as a fuel for home heating and industrial and utility boilers. Fuel oil is divided into two broad categories, distillate fuel oil, also known as No. 2 fuel, gasoil, or diesel fuel; and residual fuel oil, also known as No. 6 fuel, or, outside the United States, just as fuel oil. No. 2 fuel is a light oil used for home heating, in compression ignition engines, and in
light industrial applications. No. 6 oil is a heavy fuel used in large commercial, industrial, and electric utility boilers.

Fundamental Analysis
The study of pertinent supply and demand factors which influence the specific price behavior of commodities. Also see Technical Analysis.

Fungible
Interchangeable. Products which can be substituted for purposes of shipment or storage.

Futures Contract
A contract between a buyer and seller, whereby the buyer is obligated to take delivery and the seller is obligated to provide future delivery of a fixed amount of a commodity at a predetermined price at a specified location. Futures contracts are most often liquidated prior to
the delivery date and are generally used as a financial risk management and investment tool rather than for supply purposes. These contracts are traded exclusively on regulated exchanges and are settled daily based on their current value in the marketplace.

Futures Commission Merchant (FCM)
An FCM is the only industry participant who receives, handles, and manages customer funds, margin payments, and commission charges. He is also responsible for confirmation of trade slips, customer statements, and guarantees.

Futures-Equivalent
A term frequently used with reference to speculative position limits for options on futures contracts. The futures-equivalent of an options position is the number of options multiplied by the previous day’s risk factor or delta for the options series. For example, 10 deep out-of-the money options with a risk factor of 0.20 would be considered two futures-equivalent contracts. The delta or risk factors used for this purpose is the same as that used in delta-based margining and risk analysis systems.

Futures Industry Association (FIA)
A national not-for-profit futures industry trade association that represents the brokerage community on industry, regulatory, political, and educational issues.