The Chicago Board of Trade (CBOT) is one of the oldest futures and options exchanges in the world. It facilitates trading in a variety of commodity contracts, including agricultural products, metals, and energy.
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Founded in 1848, CBOT has been a key player in the development of modern futures markets.
In 2007, CBOT merged with the Chicago Mercantile Exchange (CME), forming CME Group.
CBOT allows traders to hedge against commodity price risk by locking in prices for future delivery.
Major commodities traded on CBOT include corn, soybeans, wheat, and precious metals like gold and silver.
CBOT operates both electronic trading platforms and traditional open outcry pit trading.
Review Questions
What year was the Chicago Board of Trade founded?
Name two major agricultural commodities traded on the CBOT.
How does CBOT help traders manage commodity price risk?
Related terms
Futures Contract: A legal agreement to buy or sell a particular commodity at a predetermined price at a specified time in the future.
Hedging: A risk management strategy used to offset potential losses by taking an opposite position in a related asset.
Commodity Price Risk: The uncertainty associated with changes in the prices of commodities that can affect stakeholders involved in their production or consumption.