Contract Unit

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Dictionary Says

Definition of 'Contract Unit'

The actual amount of the underlying asset represented by a single futures or derivatives contract. The underlying asset could be anything that is traded on a futures exchange, from agricultural commodities and metals to currencies and interest rates. Since futures contracts are highly standardized, the contract unit will specify the exact amount and specifications of the asset, such as the number of barrels of oil or amount of foreign currency. The contract unit for an options contract is 100 - meaning that every contract is for the purchase or sale of 100 shares.

Also known as trading unit.

Investopedia Says

Investopedia explains 'Contract Unit'

Different futures contracts have different contract units and measurements. For example, a CAD/USD (Canadian dollar/U.S. dollar) futures contract traded on the Chicago Mercantile Exchange (CME) has a contract size of C$100,000, while an E-mini contract also traded on the CME has a size of C$10,000. A EUR/USD contract on the CME has a size of E$125,000, while a gold futures contract has a size of 100 troy ounces. As a result of these differences in sizes and specifications, there may be considerable variances in the actual dollar value of different futures contracts.

Contract units make it easy for investors to decide on the number of contracts needed to hedge their exposure. For example, a U.S. company that has to pay C$1 million to its Canadian supplier in three months and wishes to hedge its exposure to a rising Canadian dollar, can do so through the purchase of 10 CAD/USD futures contracts.

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Search results for

'Contract Unit'

  • Commodities: Platinum | Investopedia

    http://www.investopedia.com/university/commodities/commodities15.asp
    ... Each contract unit may consist of ingots or plates, each incised with the lot or
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  • A Primer On Palladium

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    ... Each contract unit may consist of ingots or plates, each incised with the lot or
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  • A Primer On Palladium

    http://www.investopedia.com/articles/fundamental-analysis/12/a-primer-on-palladium.asp
    ... Each contract unit may consist of ingots or plates, each incised with the lot or
    bar number, weight, grade, name or logo of the assayer and symbol identifying ...

  • Energy Sector Breakup Candidates

    http://stocks.investopedia.com/stock-analysis/2011/Energy-Sector-Breakup-Candidates-UNT-MDU-WMB-MRO-MPC0704.aspx
    ... The contract drilling segment owns 126 land rigs, including five new builds. In
    the first quarter of 2011, Unit Corp reported only a 58% utilization rate for ...

  • Commodities: Lumber | Investopedia

    http://www.investopedia.com/university/commodities/commodities11.asp
    ... Each delivery unit shall consist of and be grade stamped No.1 or No.2 AND
    BETTER. Contract Months, Jan, March, May, July, Sept, Nov. ...

  • Series 7 Study Guide - Packaged Securities - Unit investment ...

    http://www.investopedia.com/exam-guide/series-7/packaged-securities/unit-investment-trust.asp
    ... 6.3 Unit investment trusts (UITs); 6.4 Other Types of Investment Companies; 6.5 ... 6.13
    Valuing a Variable Annuity Contract; 6.14 Real Estate Investment Trusts (REITS ...

  • 20 Investments: Futures Contract | Investopedia

    http://www.investopedia.com/university/20_investments/8.asp
    20 Investments: Futures Contract. ... per pound. Selling a futures contract
    means you are obligated to deliver these goods. The same ...

  • 20 Investments: Unit Investment Trusts (UITs) | Investopedia

    http://www.investopedia.com/university/20_investments/19.asp
    20 Investments: Unit Investment Trusts (UITs). ... Each unit typically costs $1,000,
    is sold by brokers to investors, and can be resold in the secondary market. ...

  • Series 7 Study Guide - Packaged Securities - Valuing a Variable ...

    http://www.investopedia.com/exam-guide/series-7/packaged-securities/value-variable-annuity.asp
    ... 6.3 Unit investment trusts (UITs); 6.4 Other Types of Investment Companies; 6.5 ... 6.13
    Valuing a Variable Annuity Contract; 6.14 Real Estate Investment Trusts (REITS ...

  • Products That Cost More To Make Than To Buy - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0910/Products-That-Cost-More-To-Make-Than-To-Buy.aspx
    ... If you drop the contract, they'll still get the money back to cover the ... first released,
    was estimated by research company iSuppli to be around $300 per unit. ...

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