NISM Series XVI - Commodity Derivatives Exam Notes
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In the compulsory delivery option, both buyer and seller having an open position during the tender/delivery period of the contract are obligated to take/give delivery of the commodity
The tick size (minimum change) in commodity derivative price differs from product to product. Tick value shows the worth of one tick on contract value. The calculation of tick value is dependent on three parameters: Lot size, quotation factor and tick size.
Tick size is significant for Algo traders as well as Hedgers / Speculators. In most cases, higher tick size benefits algo traders while lower tick size benefits hedgers.
Trailing stop loss order is a stop loss order placed by a trader to minimize losses and protect potential profits. Once placed, the price in the trailing stop loss order will adjust based on the settings that the trader set on at the initiation of the trade.
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