Commodity Derivatives: Markets and Applications

Glossary

AAU

Assigned amount units. Under the terms of the Kyoto agreement, an AAU allows the holder the right to emit 1 tonne of carbon dioxide.

 

Allocated gold

Gold that is stored on an allocated basis means that ownership of individual bars is clearly identified. The opposite is unallocated gold, where the metal is kept in a vault and ownership of a particular bar is not identified.

 

American option

An option that allows the holder to exercise their right to buy or sell at anytime prior to expiry.

 

Annex B country

Under the terms of the Kyoto agreement, annex B countries represented those nations who were willing to commit to legally binding targets to reduce emissions.

 

API

The density of crude oil is often expressed in terms of an API value. The scale was devised by the American Petroleum Institute and the lower the value the more dense the crude oil and vice versa.

 

Arbitrage

This describes a situation where an asset is trading at two different prices in the same market. This would allow a participant to buy and sell quickly to make a risk free profit net of any costs.

 

Argus media

An independent price reporting and energy news agency.

 

Asian Petroleum Pricing Index

This is a popular benchmark for pricing crude oils from Asian markets.

 

Assay

An analysis to determine the presence of a particular substance or component. Within the context of gold an assay will determine the percentage of the metal within a particular bar. In the crude oil market the process is used to determine ...