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Kansas City Board of Trade The Kansas City Board of Trade KCBT is a place where buyers and sellers gather to trade their commodities That KCBT they get together to buy and sell hard red winter wheat the Value Line Index natural gas and the ISDEX Internet stock index Future and options contracts can be lock into a purchase price or sale price in advance which lowers the risk of volatile prices This is known as hedging Future contracts are agreement between a buyer and seller to deliver a product for a certain date in the future When these contracts are made the price quantity and delivery date have already been preset In option contracts he gives the buyer or the seller to take hold of the product in the future but isnt required In dealing with option contracts you have to look at a few words in order to understand what going on First you have put which gives you a chance to take short futures position of product so you dont worry about downward price movement Second you have call which gives you a chance to take long futures position of product so you dont worry about upward price movement Either way businesses use option contracts as insurance to protect the bottom line Just like anything else the prices of these contracts are determined by supply and demand If you have more buyers then sellers the price goes up If you have more sellers than buyers the price goes down When trading is taking place you notice the traders yell and wave their arms Why is this you ask It may seem the are acting silly but they are actually communicating with a special language They have series of hand signals and type of verbal shorthand to indicate whether buying or selling and at what price They yell so they can be heard in the loud trading pit These actions
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