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. How can a futures trader exit a position prior to expiration?

    A futures contract is an agreement to buy or sell a commodity at a pre-determined price and quantity at a future date in ... Read Answer >>
  2. What does it mean to take delivery of a derivative contract?

    Find out more about derivative contracts and what it means when the holders of derivative contracts take delivery of the ... Read Answer >>
  3. What are managed futures?

    Managed futures are futures positions entered into by professional money managers, known as commodity trading advisors, on ... Read Answer >>
  4. How do the investment risks differ between options and futures?

    Learn what differences exist between futures and options contracts and how each can be used to hedge against investment risk ... Read Answer >>
  5. What does the underlying of a derivative refer to?

    Find out more about derivative securities, what an underlying asset is and what the underlying assets refer to in stock options ... Read Answer >>
  6. What is the difference between forward and futures contracts?

    Fundamentally, forward and futures contracts have the same function: both types of contracts allow people to buy or sell ... Read Answer >>
Related Articles
  1. Investing

    What's The Difference Between Options And Futures?

    An option gives the buyer the right, but not the obligation, to buy or sell a certain asset at a set price during the life of the contract. A futures contract gives the buyer the obligation to ...
  2. Trading

    Futures Fundamentals

    For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them.
  3. Investing

    Introduction To Currency Futures

    The forex market is not the only way for investors and traders to participate in foreign exchange.
  4. Trading

    Stock Futures vs Stock Options

    A full analysis of when is it better to trade stock futures vs when is it better to trade options on a particular stock. A quick overview of how each of them works and why would a trader, investor, ...
  5. Investing

    What is a Forward Contract?

    A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date.
  6. Investing

    Commodity Investing 101

    From the orange juice we drink to the gas we use to power our vehicles and heat our homes, commodities play important roles in our daily lives.
RELATED TERMS
  1. Futures

    A financial contract obligating the buyer to purchase an asset ...
  2. Cash Contract

    A financial arrangement that requires delivery of a particular ...
  3. Wild Card Play

    Having the right to deliver on a futures contract at the last ...
  4. Assignable Contract

    A futures contract with a provision permitting the contract holder ...
  5. Contract Holder

    An individual or organization who owns the rights to a debt or ...
  6. Delivery Date

    1. The final date by which the underlying commodity for a futures ...
Hot Definitions
  1. Revolving Credit

    A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is ...
  2. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
  3. Contango

    A situation where the futures price of a commodity is above the expected future spot price. Contango refers to a situation ...
  4. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  5. Acid-Test Ratio

    A stringent indicator that indicates whether a firm has sufficient short-term assets to cover its immediate liabilities. ...
  6. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
Trading Center