Retender

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DEFINITION of 'Retender'

The sale of a delivery notice for the underlying asset in a futures contract. A retender (also spelled re-tender) occurs when the buyer of a futures contract doesn't want to receive the underlying asset, which could be a complicated commodity such as corn or oil. By retendering the delivery, or tender, notice, they assure that the assets get delivered to the buyer of the notice instead.

BREAKING DOWN 'Retender'

Many traders of futures contracts want to bet on the direction in which they think the price of a particular commodity is going to move. They do not want to actually buy or receive the tangible asset that the contract is based on. Not all futures contracts allow for retendering, and some provide for cash settlement.

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RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. How can an investor profit from a fall in the utilities sector?

    The utilities sector exhibits a high degree of stability compared to the broader market. This makes it best-suited for buy-and-hold ... Read Full Answer >>
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    Commodity spot prices and futures prices are different quotes for different types of contracts. The spot price is the current ... Read Full Answer >>

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