New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1899-01-01

PROCESS OF CONDUCTING OPERATIONS
WHAT VARIOUS TERMS MEAN

WHAT VARIOUS TERMS MEAN.
The Tribune has received letters from number
of readers asking for the publication OF an article
which shall give general outline OF the process
of conducting operations on the Produce Exchange.
and shall embrace also definitions OF some OF the
technical expressions commonly employed in mar
ket articles grain and the other commodities
dealt in on the floor Of that Exchange
A "bull' long the Produce Exchange. as
on the Stock Exchange is operator who be
lieves that the market will advance. and who buys
a certain price In the expectation of selling Mt a
higher figure.
A bear short the other hand. seeks
his opportunity in a decline OF prices and is inter-
csted In depressing the market, his policy being 10
sell short
An operator the Produce Exchange sells
short when he makes sale at a certain figure
say Of wheat which he does not actually hold. In
the belief that In the interval between the day on
which he makes such sale and the day on wnlch
he must deliver the wheat sold by him, he VIII be
enabled TO buy In the market the amount OF wheat
which he has contracted deliver. paying for II
price far below that at which he made his orsi-
nal sale that the difference will represent to him
substantial profit. But II, after he has sold this
wheat, which he does not possess, the wn"t mar
ket should advance instead OF decline s"1 II
should appear TO him that his calculations had
been wrong. and that there was no probability that
at the time of delivery the price az wheat wouiu
be lower than at the time he made his sale for
future delivery" he would be likely In the mean
while 10 "cover his short contract, buying the
amount of wheat he was obligated 10 deliver ana
paving for It a price which, although higher than
that at which he had sold the corresponding guam
tity Of wheat would still his opinion. be lower
than that which he would be obliged to pay " he
should delay his purchase until the last possible
moment before delivery must be made by him. he
would in thus covering his short" contract. OF
course. suffer a loss. but would avert a sui
greater loss
A margin" is the money which brokers require
from their customers security against loss IN
executing orders 70. the customers for the pur-
chase or sale for delivery Of stocks or wheat
or other commodity. The margins fixed by Prod
uce Exchange usage follows: On wheat .
cents bushel. equal TO $3.50 for each 5fo) busnels
on corn 3 cents n bushe equal to $50 for each
5000 bushels: oats, cents bushei equal 10 Sl1o
for each 5000 bushels pork 81 a barrel, equal 10
$3.50 for each $50 barrels; lard, % uerce' equa
to $500 for each 250 tierces and on shortrio SIDES
other meats. y cent a pound. equal 10 s-oV lor
each 5000 pounds
When however the market is fuctuatng rap
idly. customers are called upon to put up larger
margins than those given. And when the price OF
the commodity bought or sold. as the case may be-
declines az bought advances or Sold TO hs-
ure which points 10 Ii speedy swallowing up OF the
margin which has been already deposited with the
commission house the latter calls on the customer
for a further margin. failing the receipt or "hich
the commodity which Is being carried is closed out
for account Of the customer. the commission-house
rembursing itself TO the extent OF the actual loss
to date and turning over TO the customer the re-
naming part If any Of the original margin
The commissions charged for buying and selling
on the Produce Exchange Gound transactions) are
usually as follows: on wheat. corn or oats. one
eighth cent bushel pork. five cents a barrel lard
five cents a tierce. There is usually no interest
charged In carrying grain and provision deals AS
dtnO no
lots Of less than FIVE thousand bushels OF grain
two hundrsd and y ssT aTs on @ THO
pounds of short ribs sides or other meats ,,,,oss
otherwise specified is known Contract wheat"
upon which the seller has the right 70 aelv d ,n IN
ter wheat No. Northern spring wheat or no.
hard spring wheat There are twelve grades %, OF
WINTER Winter ~ Wheat which must be bright sound
dry plump and well cleaned to reeeted winter
whest unit TO- grade No A. OF hard Winter wheat
there are four y.e sSsa s sa OF [ns
is practically all for future delivery" In the
Sou sa S or sold for delivery month IN the
future but when 1t Is noticed that Sse RsT or
May these months become the ruling months.
n months the are aas paSc daily
serve as a sort OF standard When sale 10,
f sSId now may be delivered at any time in the
course OF the month Of May from the mrs. , gay
oution" unless otherwise stipulated Ihat IS me
nerron selling the wheat has the privlege or
Horssion" Of delivering 1t on any day In May which
he may elect If the deal Is at buyer opIons, -
the purchaser oan the day in May on which the
seller must make delivery to him. This is what IS
meant by the May option. , us t.
The transaction between the buyer ana sel .aeT
r. the buyer on some day Of the month specihsu
i'm the contract Of the wheat contracted 70 oe
60 delIvered or II the seller finds II inpossiDe 20
secure the actual wheat for delivery: by the pay
rnent by him TO the buyer Of sum OF money equal
70 the difference Of cost Of the wheat on me cay
Of sale and the day of nominal delivery ! ne GUS
toner ON margin may sell out his interest az any
tIme but the commission merchant throush WIZ" H,
ne oneratez may possibly have 10 wait untll nay
before he can settle the contract "hich ne iIaue
,r behalf If his customer. There has been IN 0peI
alton for many years a Produce EXCHANGE sieai-
;nr Uouse through the agency Of which traces OF
series Of trades between members OF the Exchange
ac,irp either for themselves or Tor customers az
co,nr'ia,ed nv means OF setting-o or accounts
tho amount Of money changing nands beins
TIC Produce Exchange rule forbidding the Duy,nsH
or selling Of privileges known as puts amd hnw
yras recently rescinded These privileges, now
ever which are in effect sort OF lnsu y, ne
against loss in trading are OF especial use -, that
een trading and little dealt IN except III ''ia'
sort Of trading