Call Rule

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DEFINITION of 'Call Rule'

A exchange rule whereby the official bidding price for a cash commodity is competitively established at the end of each trading day and held until the opening of the exchange the following trading day.

INVESTOPEDIA EXPLAINS'Call Rule'

The call rule attempts to reduce overnight volatility by ensuring commodity prices begin trading near the previous day's closing bid.

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RELATED FAQS
  1. What is a call rule?

    A call rule is a rule used in the futures exchange market. It is a rule that requires the formal bidding amount of a cash ... 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. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
  4. 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 >>
  5. 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 >>
  6. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>

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