Differential

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Dictionary Says

Definition of 'Differential'


The amount of adjustment of the delivery location and grade of deliverables that a futures contract permits. Also known as "allowance. "

Investopedia Says

Investopedia explains 'Differential'


Some futures contracts allow the short position to adjust the location of the delivery and/or the grade of commodity being delivered. The permitted differentials are set in relation to a central location or the par basis grade.


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