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. Trading Floor

    The floor where trading activities are conducted. Trading floors ...
  2. Open Outcry

    A vanishing method of communicating on a stock, commodity or ...
  3. Floor Trader - FT

    An exchange member who executes transactions from the floor of ...
  4. Fast Tape

    A type of futures market that occurs when a single traded price ...
  5. Pit

    A specific area of the trading floor that is designated for the ...
  6. Exchange Traded Derivative

    A financial instrument whose value is based on the value of another ...
RELATED FAQS
  1. If a long call is owned on the record date of a stock, is the owner of the option ...

    The owner of a long call for a stock is entitled to a dividend only if the option is exercised prior to the ex-dividend date, ... Read Full Answer >>
  2. How can an investor profit from the cyclical nature of the electronics sector?

    An investor can profit from the cyclical nature of the electronics sector in two ways. He can employ sector rotation, shifting ... Read Full Answer >>
  3. What does negative vega mean for credit spreads?

    Greek vega measures an option's sensitivity with respect to a change in the underlying asset's volatility. The vega of an ... Read Full Answer >>
  4. What options strategies are best suited for investing in the banking sector?

    The covered call option strategy allows investors to profit from the banking sector's stability and its track record for ... Read Full Answer >>
  5. What options strategies are best suited for investing in the drugs sector?

    The covered call and long straddle options strategies enable investors to capitalize on the unique characteristics of the ... Read Full Answer >>
  6. How can an investor make money from a decline in the electronics sector?

    Speculation methods, such as short selling, futures contracts and put options, offer investors a way to make money from a ... Read Full Answer >>
Related Articles
  1. Active Trading Fundamentals

    3 Things Investors Can Learn From Traders

    By incorporating some of the best practices of top traders, investors can greatly improve portfolio returns.
  2. Investing Basics

    The Roles Of Traders And Investors In The Marketplace

    Discover how these two groups work together to keep the market functioning properly.
  3. Options & Futures

    What Can Traders Learn From Investors?

    Discover tips from a long-term strategy that can help you make better short-term trades.
  4. Active Trading

    Traders: Profit From Other Investors' Fear

    Learn to pounce on the opportunity that arises when other traders run and hide.
  5. Active Trading

    Taking a Trip to Trader Town: Exploring the Trader's Chatroom

    Traders don't have to be solitary to be successful--discover how to connect with fellow traders and experts.
  6. Active Trading

    Fundamental Analysis For Traders

    Find out how this method can be applied strategically to increase profit.
  7. Forex Education

    Lessons From A Trader's Diary

    Discover what this trader learned from his mistakes and how to uncover your own.
  8. Mutual Funds & ETFs

    The Top 3 Silver ETFs

    Like any tradable asset, silver and silver ETF prices are governed by the fundamental market economic forces of supply and demand.
  9. Options & Futures

    How To Trade Orange Juice Options

    How do orange juice options work and which factors determine the orange juice valuations? Here's a sneak peak into the world of orange juice options.
  10. Active Trading Fundamentals

    Invest In Gold Through ETFs

    The mystique of the yellow metal captivates market players seeking hedges against inflationary pressure, safe haven in turbulent times and opportunities for speculative trading opportunities. ...

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center