Round Turn

Starting to rain
Starting to rain

The purchase (or sale) of a futures contract commits the buyer (seller) to accept (provide for) the delivery of a commodity or financial instrument in a specified amount of the commodity or financial instrument at a specified time, location, amount, and quality.

If the buyer or seller of the futures contract does not want to take on the obligation of accepting or providing delivery of the underlying commodity or financial instrument, it is necessary to enter into an of setting purchase or sale of the same futures contract.

For example, if one purchased a contract for 1000 barrels of June 2008 crude oil, then one would need to sell a contract for 1000 barrels of June 2008 crude oil prior to the last trading day for this futures contract, as specified by the relevant futures exchange in order to not have to accept or receive delivery of 1000 barrels of crude oil. This purchase and corresponding sale of a futures contract is termed "round turn".

loading...