Rings

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.



comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens. Some legal scholars argue that successor governments should not be held accountable for odious debt incurred by earlier regimes, but there is no consensus on how odious debt should actually be treated.
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by additional investment would not warrant the expense. A harvest strategy is employed when a line of business is considered to be a cash cow, meaning that the brand is mature and is unlikely to grow if more investment is added.
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better.
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
Trading Center