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 isn’t 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 don’t worry about downward price movement
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If you have more buyers then sellers, the price goes up. I don’t think I would have visited that place unless I was requested to. The Clearing Corp is a house for trading activity, protecting the integrity of the market. Just like anything else the prices of these contracts are determined by supply and demand. You have one person after person shouting over each other. I don’t think that it’s something that I could on daily bases. They have series of hand signals and type of verbal shorthand to indicate whether buying or selling and at what price. Either way, businesses use option contracts as insurance to protect the bottom line. Why is this you ask? It may seem the are acting silly, but they are actually communicating with a special language. So how keeps track of all these trades? Well it’s up to the trader to write down all the important information on a little card that is identified with his initials. I know that it’s suppose to be that way in order to keep the playing fields equal, but can you really hear every price that is shouted out? I’m sure that must of the people that do the job learn to listen for certain things, but does that mean you are missing out on other great buys and sells? Overall it was a great trip and was worth my time to go and see. Sitting in the visitors gallery watching the “state of intense excitement” going on, it’s amazing how they are able to hear each other. It was nice to learn some new history on Kansas City, and that we are providing the United States with food they eat, and the heat of natural gas.
Approximate Word count =
673
Approximate Pages =
3 (250 words per page double spaced)
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