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. What is the relationship between the current yield and risk?

    The general relationship between current yield and risk is that they increase in correlation to one another. A higher current ... Read Full Answer >>
  2. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  3. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
  4. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  5. Who or what is backing municipal bonds?

    Municipal bonds are backed by dedicated taxes or revenue sources related to specific projects, or by the full faith and credit ... Read Full Answer >>
  6. How stable are municipal bonds?

    Stability is relative in the municipal bond market. Municipal bonds tend to be safer than many other types of investments, ... Read Full Answer >>
Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  2. Mutual Funds & ETFs

    ETF Analysis: Guggenheim Enhanced Short Dur

    Find out about the Guggenheim Enhanced Short Duration ETF, and learn detailed information about this fund that focuses on fixed-income securities.
  3. Mutual Funds & ETFs

    ETF Analysis: iShares Agency Bond

    Find out about the iShares Agency Bond exchange-traded fund, and explore detailed analysis of the ETF that tracks U.S. government agency securities.
  4. Mutual Funds & ETFs

    ETF Analysis: Vanguard Intermediate-Term Bond

    Find out about the Vanguard Intermediate-Term Bond ETF, and delve into detailed analysis of this fund that invests in investment-grade intermediate-term bonds.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Total USD Bond Market

    Learn about the iShares Core Total USD Bond Market ETF and how it contains holdings that have noninvestment grade ratings, unlike many other bond funds.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares 3-7 Year Treasury Bond

    Take a closer look at the iShares 3-7 Year Treasury Bond ETF, which is a BlackRock issue focused on intermediate maturity government bonds.
  7. Economics

    What are the Federal Reserve Chairman's responsibilities?

    Learn about the duties and responsibilities of the chairman of the Federal Reserve Board, including testifying before Congress and as chair of the FOMC.
  8. Investing Basics

    Explaining Forward Rate Agreements

    Forward rate agreement (FRA) refers to an interest rate or foreign exchange hedging strategy.
  9. Options & Futures

    An Introduction To Value at Risk (VAR)

    Volatility is not the only way to measure risk. Learn about the "new science of risk management".
  10. Mutual Funds & ETFs

    ETF Analysis: United States Natural Gas Fund LP

    Find out more about the United States Natural Gas exchange-traded fund, the characteristics of the ETF and the suitability and recommendations of it.
RELATED TERMS
  1. Derivative

    A security with a price that is dependent upon or derived from ...
  2. Inverse Transaction

    A transaction that can cancel out a forward contract that has ...
  3. Best To Deliver

    The security that is delivered by the short position holder in ...
  4. Exchange Traded Derivative

    A financial instrument whose value is based on the value of another ...
  5. Bond

    A debt investment in which an investor loans money to an entity ...
  6. Cash-And-Carry Trade

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

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!