Look-Alike Contracts

AAA

DEFINITION of 'Look-Alike Contracts'

A financial product, such as a swap or an option, that is traded over-the-counter and that is cash settled, based on the settlement price of a similar, exchange-traded futures contract, on a specific trading day. Futures look-alike contracts are regulated by the Commodity Futures Trading Commission (CFTC).

INVESTOPEDIA EXPLAINS 'Look-Alike Contracts'

A NYMEX look-alike, for example, is a look-alike option or look-alike swap, based on a futures contract that is traded on the New York Mercantile Exchange (NYMEX). The contract terms of a look-alike contract, closely correspond with the contract terms of the futures contract. Look-alike contracts are available on a variety of contracts including oil, coal, crude oil, natural gas, Brent (a major classification of crude oil) and WTI (West Texas intermediate, also known as Texas light sweet, a type of crude oil).

RELATED TERMS
  1. Commodity

    1. A basic good used in commerce that is interchangeable with ...
  2. Cash Settlement

    A settlement method used in certain future and option contracts ...
  3. Over-The-Counter - OTC

    A security traded in some context other than on a formal exchange ...
  4. West Texas Intermediate - WTI

    Light, sweet crude oil commonly referred to as "oil" in the Western ...
  5. New York Mercantile Exchange - ...

    The world's largest physical commodity futures exchange. Trading ...
  6. Futures Contract

    A contractual agreement, generally made on the trading floor ...
RELATED FAQS
  1. Who sets the price of commodities?

    Commodities are extremely important as they are essential factors in the production of other goods. A wide of array of commodities ... Read Full Answer >>
Related Articles
  1. Forex Education

    The Pros And Cons Of Trading Forex In An Overseas Account

    The Dodd-Frank Act of 2010 could impact whether overseas accounts benefit FX investors.
  2. Options & Futures

    Fueling Futures In The Energy Market

    The energy market influences every aspect of our lives, and these four options are its driving force.
  3. Options & Futures

    Commodities That Move The Markets

    Find out how the everyday items you use can affect your investments.
  4. Economics

    Overseas Investing No Protection Against Downturn

    The U.S. economy affects many other countries. Find out what this can mean for overseas investments.
  5. Chart Advisor

    These Oil Service Stocks Are Ready For A Move Higher

    In the oil services sector, active traders have been trying hard to establish a floor and the double bottom pattern that is appearing on the chart suggests that a short-term reversal could be ...
  6. Options & Futures

    Examples Of Exchange-Traded Derivatives

    We look at some of the most common exchange-traded derivatives.
  7. Options & Futures

    Advantages Of Trading Futures Over Stocks

    We look at the top eight advantages of trading futures over stocks.
  8. Chart Advisor

    Watch Out Below For Falling Lumber Prices

    A drop in the spot price of lumber shows that the bears have pushed the price below two significant levels of support.
  9. Economics

    Bulk Shipping Companies Struggle As Markets Soften

    The "soft" dry bulk shipping market that confronts shipping companies is a result of lower demand from China, and an excessive amount of bulk ships.
  10. Economics

    Why Low Oil Prices Benefit Saudi Arabia?

    Saudi Arabia's large currency reserves and dominant position in the oil market allows it to manipulate the current scenario to its favor and provides political leverage against rival countries. ...

You May Also Like

Hot Definitions
  1. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  2. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  3. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  4. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  5. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
  6. Currency Carry Trade

    A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase ...
Trading Center