What is a wild-card play?

By Katie Adams AAA
A:

A wild-card play is a term related to futures contracts. A future is a financial contract obligating a buyer to purchase, or a seller to sell, a particular asset such as a physical commodity or a financial instrument at a predetermined future date and price.

A wild-card play exists when the contract holder maintains the right to deliver on the contract for a specified period of time after the close of trading at the closing price. This can financially benefit the contract holder if there is a shift in the value or price of the asset between the setting of the closing price and the actual delivery.

For example, the holder of a Treasury bond or Treasury note futures contract can announce his/her intention to deliver on the contract before the market closes at 2:00 pm (CST) but can delay delivery until 8:00 pm. The contract holder can take advantage of any changes in interest rates during this time to better leverage his/her position.

For more on this read, Futures Fundamentals: Strategies.

This question was answered by Katie Adams.

RELATED FAQS

  1. Is short selling ethical?

    Understand the concept and practice of short selling, and examine the ethical questions that some investors raise in regard ...
  2. How is it possible to trade on a stock you don't own, as is done in short selling?

    Understand how the process of short selling allows a person to sell a stock he or she doesn't technically own by borrowing ...
  3. What kinds of restrictions does the SEC put on short selling?

    Learn about the rules and regulations on short selling enforced by the U.S. Securities and Exchange Commission, or SEC, including ...
  4. When short selling, how long should you hold on to a short?

    Explore the reasons for short selling and the various factors that influence how long an investor may wish to maintain a ...
RELATED TERMS
  1. Cash-And-Carry Trade

    A trading strategy in which an investor buys a long position ...
  2. Treasury Yield

    The return on investment, expressed as a percentage, on the debt ...
  3. ISDA Master Agreement

    A standard agreement used in over-the-counter derivatives transactions.
  4. Series I Bond

    A non-marketable, interest-bearing U.S. government savings bond ...
  5. Circus Swap

    A combination of an interest rate swap and a currency swap in ...
  6. Domestic Box Office Receipt (DBOR) Futures Contracts

    Futures contracts based on movie receipts at the box-office. ...

You May Also Like

Related Articles
  1. Investing Basics

    The Strange New World Of The Bitcoin ...

  2. Stock Analysis

    Government Bond ETFs: Pros and Cons

  3. Trading Strategies

    Trade Weekly & Up Your Reward Potential

  4. Investing Basics

    CDs or Bonds: Which Investment is Better ...

  5. Bonds & Fixed Income

    Interested In West African Debt? Look ...

Trading Center