Rings

AAA

DEFINITION of 'Rings'

The locations on the floors of futures and options exchanges where trades are executed. Rings are the circular arenas on exchange trading floors where traders transfer information about buy and sell orders. They are part of the open outcry system of trading that involves verbal bids and offers and hand signals to convey trading information.

A separate ring is used for each different trading instrument; for instance, the options on a futures contract would typically be in the adjacent ring. The different areas of one pit correspond to the various contract expiration months, with the nearest month taking up the largest section. Workstations around each ring allow exchange members to communicate with pit traders, brokers and large institutional investors. The ring is also called the pit, or the trading pit.

INVESTOPEDIA EXPLAINS 'Rings'

The rings, or pits, were designed so that the participants can see each other. The round shape has wide steps that lead down towards the center of the pit. Buyers and sellers stand on the steps and shout orders and use hand signals to convey information.

Many different hand signals have been developed to facilitate the trading process, and these signals are often confined to a single exchange or even a certain pit. The Chicago Mercantile Exchange version of a call option, for example, involves holding the hand in the shape of a "C" where the thumb forms the bottom of the letter and the rest of the fingers line up to make up the top of the letter.

RELATED TERMS
  1. Fast Tape

    A type of futures market that occurs when a single traded price ...
  2. Floor Trader - FT

    An exchange member who executes transactions from the floor of ...
  3. Open Outcry

    A vanishing method of communicating on a stock, commodity or ...
  4. Pit

    A specific area of the trading floor that is designated for the ...
  5. Trading Floor

    The floor where trading activities are conducted. Trading floors ...
  6. Multibank Holding Company

    A company that owns or controls two or more banks. Mutlibank ...
Related Articles
  1. Active Trading Fundamentals

    3 Things Investors Can Learn From Traders

  2. Investing Basics

    The Roles Of Traders And Investors In ...

  3. Options & Futures

    What Can Traders Learn From Investors?

  4. Active Trading

    Traders: Profit From Other Investors' ...

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center