Futures Trading Terms Glossary

CABINET TRADE

Welcome to the RJO Futures trading terms glossary. Within this glossary, you will find an expansive list of trading terms covering commodity, option, and futures trading terminology. Bookmark this section as a quick reference for definitions of trading terms as you browse the Internet and our site for more information on futures and options trading within the financial and commodities markets.

C

Cabinet Trade×

Allows options traders to liquidate deep-out-of-the-money options by trading the options at a price equal to less than one tick, this often amounts to a price one half of one percent of the face value. A cabinet trade is used as the final nail in the coffin of what is more or less a useless option in order to help recoup a faction of the losses and is the lowest possible tradable price for the option. It should also be noted that a cabinet trade cannot be used to initiate short or long positions. It’s basically an “end all be all” last resort.