Shock Absorber

AAA

DEFINITION of 'Shock Absorber'

A temporary restriction placed on the trading of index futures because of substantial intraday decreases in the underlying indexes.

INVESTOPEDIA EXPLAINS 'Shock Absorber'

Shock absorbers are very similar to circuit breakers. However, these restrictions are more specific as they isolate a single index and are enacted at a tighter level. The shock absorbers restrict trading and provide a period of information and pricing absorption for the holders of index futures contracts.

RELATED TERMS
  1. Collar

    1. A protective options strategy that is implemented after a ...
  2. Circuit Breaker

    Refers to any of the measures used by stock exchanges during ...
  3. Intraday

    Another way of saying "within the day". Intraday price movements ...
  4. Index

    A statistical measure of change in an economy or a securities ...
  5. Index Futures

    A futures contract on a stock or financial index. For each index ...
  6. Trading Halt

    A temporary suspension in the trading of a particular security ...
Related Articles
  1. Investing Basics

    The Strange New World Of The Bitcoin Exchange Futures Market

    We explain the basics of the Bitcoin exchange and futures market.
  2. Options & Futures

    Is short selling ethical?

    Understand the concept and practice of short selling, and examine the ethical questions that some investors raise in regard to this practice.
  3. Options & Futures

    How is it possible to trade on a stock you don't own, as is done in short selling?

    Understand how the process of short selling allows a person to sell a stock he or she doesn't technically own by borrowing on margin from a broker.
  4. Options & Futures

    What kinds of restrictions does the SEC put on short selling?

    Learn about the rules and regulations on short selling enforced by the U.S. Securities and Exchange Commission, or SEC, including the uptick rule.
  5. Options & Futures

    When short selling, how long should you hold on to a short?

    Explore the reasons for short selling and the various factors that influence how long an investor may wish to maintain a short position.
  6. Mutual Funds & ETFs

    Are there leveraged ETFs that track the oil & gas drilling sector?

    Explore the investing options that are available through leveraged ETFs that can be used to track the oil and gas drilling sector.
  7. Trading Strategies

    Trade Weekly & Up Your Reward Potential

    Weekly patterns sidestep the HFT maelstrom by aligning trade entries and exits with the edges of longer-term trends.
  8. Options & Futures

    What are the differences between divergence and convergence?

    Find out what technical analysts mean when they talk about a market experiencing divergence or convergence and how they affect trading strategies.
  9. Options & Futures

    Futures Quotes Explained The "Easy" Way

    If there’s a security whose price fluctuates, there can theoretically be a futures marketplace for it.
  10. Options & Futures

    Why is the Accumulative Swing Index helpful for traders and/or investors?

    Find out why J. Welles Wilder believed that the accumulative swing index could be used in the futures markets to indicate long-term trends.

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center