CPT Commodities & Futures Trading 3

Question 1

What is a 'calendar spread' in futures trading?

Accepted Answer

Simultaneously buying and selling futures contracts of the same commodity in different delivery months

Answer

A calendar spread involves buying a futures contract in one delivery month and simultaneously selling a contract for the same commodity in a different delivery month to profit from changes in the price differential.

Question 2

The Commitment of Traders (COT) report is published by which organization?

Accepted Answer

Commodity Futures Trading Commission (CFTC)

Answer

The CFTC publishes the weekly COT report, which breaks down open interest by trader category (commercial, non-commercial, and non-reportable) to show market positioning.

Question 3

In commodity markets, what is 'physical delivery'?

Accepted Answer

The actual transfer of the underlying commodity from seller to buyer upon contract expiration

Answer

Physical delivery means the seller actually delivers the specified quantity and grade of the commodity to the buyer at a designated location upon contract expiration.

Question 4

What is 'position limit' in futures trading?

Accepted Answer

The maximum number of futures contracts a single trader can hold in a given commodity

Answer

Position limits are CFTC-mandated caps on the maximum number of futures contracts any single trader can hold to prevent market manipulation and excessive speculation.

Question 5

Which exchange is the primary venue for WTI crude oil futures contracts?

Accepted Answer

New York Mercantile Exchange (NYMEX)

Answer

WTI (West Texas Intermediate) crude oil futures are primarily traded on NYMEX, now part of CME Group, under the ticker CL.

(CPT) Certified Pro Trader Practice Test

(CPT) Certified Pro Trader Practice Test

CPT Commodities & Futures Trading 3