DOCSLIB.ORG

Grain Marketing Terms File A2-05

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text

Load more

Ag Decision Maker extension.iastate.edu/agdm Grain Marketing Terms File A2-05 Actuals – The physical commodities that are being • Economic cost breakeven selling price – The traded. price needed to recover all costs including the Arbitrage – The simultaneous purchase of opportunity costs associated with producing the commodities in one market and the sale of commodity. commodities in the same or different market. Arbitrage is profiting from a discrepancy in prices. Broker – One who executes futures trading orders for customers. The broker may be an employee in a local Basis – The difference between the futures price for office of a brokerage firm, or a floor broker or pit a commodity and its cash price at a specific location. broker executing orders on the trading floor. The nearby futures delivery month is usually used. • Brokerage – The fee charged by brokerage firms • Basis risk – Risk of change or variation in the for the execution of a transaction. Also called basis. commission. This fee may vary from firm to firm. • Even basis – A condition that exists when the • Brokerage house – An organization that buys local cash price is equal to the futures price. and sells for the accounts of customers. Also • Over basis – A condition that exists when the called Commission House or Wire House. local cash price is greater than the futures price. Also called positive basis. Cash market – The market in which physical • Under basis – A condition that exists when the commodities are bought and sold. Refers not only to local cash price is less than the futures prices. elevator companies and processors buying products Also called negative basis. but also to the organized cash sales at commodity exchanges and over-the-counter cash trading. • Weakening basis – Basis movement over time that occurs when the cash price is declining Charting – A part of technical analysis for forecasting relative to the futures price. price movements which analyze past price behavior through the use of charts and graphs. • Strengthening basis – Basis movement over time that occurs when the cash price is rising • Bar chart – A graph showing the high, low, and relative to the futures price. settlement prices for each trading period over time. Breakeven selling price – The price a producer must • Moving average – An arithmetic average (often receive for a commodity in order to recover all of the closing prices) over a given period of time (e.g. costs associated with producing and with storing the five days). The period is constantly moving commodity. forward in time so the average reflects only the most recent prices. • Cash flow breakeven selling price – The price needed to recover the cash expenditures • Linearly weighted moving average – The associated with producing the commodity. more recent prices are given more weight in computing the average. • Accounting cost breakeven selling price – The price needed to recover all costs except the opportunity costs associated with producing the Coarse grains – Corn, barley, oats, grain sorghum, commodity. and rye. Millet is also included in the statistics of some foreign countries. These are generally considered feed grains. Reviewed May 2021 Page 2 Ag Decision Maker File A2-05, Grain Marketing Terms Commodity – Any physical product traded on a • Delayed payment contract – An agreement in futures exchange. A fungible product (each unit is which the price is established and the grain is the same). delivered but payment is postponed until later. Consignment – Grain shipped to a third party for sale It is typically used to shift taxable income into by the third party. the following year. • On consignment grain – Grain shipped to a • Forward contract – An agreement requiring broker for sale in the cash market. the producer to deliver a specific quantity and quality of grain to the elevator at a specified time and location for a previously agreed on Corner – To secure control of a commodity so that its price. price can be manipulated. • Hedge-to-arrive contract – An agreement where Delivery – The transfer of the physical commodity in a producer chooses a future contract month satisfaction of a futures contract. and establishes the futures price for grain they • Deliverable grades – Commodity grades that intend to sell. The basis is established later at can be delivered to satisfy a futures contract. the discretion of the producer. The producer’s • Delivery month – The month in which a futures price is the futures price less the basis. Hedge- contract matures and delivery may be made or to-arrive contracts can often be rolled forward contract settlement made. to another futures contract month. The elevator performs the hedging transaction. • Delivery notice – A notice of the intent to deliver or a request to receive delivery of • Minimum price contract – An agreement in a commodity under the terms of a futures which a minimum sale price is established. The contract. producer is guaranteed either the current cash price or the minimum sale price, whichever is • Delivery points – The locations at which greater. In exchange for the minimum price commodities may be delivered to satisfy a guarantee, the producer must pay a fee similar futures contract. in size to an option premium. • Quality premium – The additional payment an • Offer contracts – A producer signs a contract exchange specifies for delivery of a commodity with an elevator indicating their desire to sell of higher than required quality against a futures a specific number of bushels of grain any time contract. cash price reaches a designated price. • Tender – Delivery against a futures position. • Price-later (delayed price) contract – An agreement in which grain is delivered and legal Elevator cash contracts – Contracts for the purchase title passes to the elevator but price is established of grain, usually from producers. later at the discretion of the producer. The price • Basis contract – An agreement in which grain to the producer on any given day is the elevator is delivered and legal title passes to the elevator. cash price less a service charge. The agreement establishes the basis but not the futures price. The producer later selects the Exercise – Action taken when the buyer of a call day on which they wish to establish the futures (put) option converts the option to the purchase price. At that time, the producer will receive the (sale) of the underlying futures contract. futures price minus the previously agreed upon • Exercise price – The price (strike price) at basis. which an option can be exercised. • Expiration – The date on which an option can no longer be exercised. Ag Decision Maker File A2-05, Grain Marketing Terms Page 3 Exchange rate – The number of units of one • Pipeline stocks – The minimum quantity of currency that can be exchanged for one unit of a commodity needed to carry on the normal another currency. A decline (increase) in the value processing and marketing operations. Tends to of the US dollar reduces (increases) the price of US be relatively constant from year to year. commodities for foreign buyers. • Buffer carryover stocks – Carryover stocks in • Devaluation – An official reduction of the excess of pipeline stocks that are carried over exchange rate of a nation’s currency. for use in the next marketing year. Buffer stocks • Fixed exchange rate – The relative values of fluctuate substantially from year to year. currencies are established and maintained by government intervention. Futures contract – A contract traded on a futures exchange that calls for delivery of a standardized • Flexible exchange rate – The value of a amount and quality of a commodity during a specific country’s currency varies and is determined by month. The contract price (per unit of commodity) the supply and demand for the currencies. is established through competitive trading at the organized exchange. Exports – Domestically produced commodities that are sold abroad. • First notice day – The first day on which notice intentions can be made or received to deliver • Export tax – A fee paid on exports to the actual commodities against futures contracts. It government of the originating country. usually precedes the beginning of the delivery • Export subsidies – Special incentives such as period. cash payments, tax exemptions, preferential • Futures contract months – The delivery months exchange rates and special contracts extended in which futures contracts are traded. by governments to encourage increased foreign sales. • Futures premium – The amount that prices for one futures contract month exceed those of • Export license – A government document another futures contract month. authorizing exports of special goods in specific quantities to a particular destination. • Last trading day – The last day of trading in a particular futures or options contract month. Unsettled contracts at the end of the last trading Fundamentals – One of two major sets of factors day must be fulfilled by delivery of the physical in analyzing prices. Fundamentals are supply and product or closed through cash settlement demand factors that influence prices of commodities. procedures if the contract does not permit Technical analysis (chart patterns) is the other major delivery. set of factors affecting prices. • Life of contract – The time period during which • Marketing year – The twelve month period a specific contract month has been trading. during which a crop normally is marketed. For example, the marketing year for the current • Maturity – The period when a futures contract corn crop is from Sept. 1 of the current year can be settled by delivery of the actual to Aug. 31 of next year. The marketing year commodity or through cash settlement if that is begins at harvest and continues until just before an alternative to delivery. harvest of the following year. • Nearby delivery month – The futures contract • Carryover – The quantity of a commodity month closest to maturity. remaining at the end of marketing year. • Open contracts – Contracts that are • Free supply – The amount of grain available to outstanding.
Recommended publications
  • Introduction to Options

    Introduction to Options

    FIN-40008 FINANCIAL INSTRUMENTS SPRING 2008 Options These notes describe the payoffs to European and American put and call options|the so-called plain vanilla options. We consider the payoffs to these options for holders and writers and describe both the time vale and intrinsic value of an option. We explain why options are traded and examine some of the properties of put and call option prices. We shall show that longer dated options typically have higher prices and that call prices are higher when the strike price is lower and that put prices are higher when the strike price is higher. Keywords: Put, call, strike price, maturity date, in-the-money, time value, intrinsic value, parity value, American option, European option, early exer- cise, bull spread, bear spread, butterfly spread. 1 Options Options are derivative assets. That is their payoffs are derived from the pay- off on some other underlying asset. The underlying asset may be an equity, an index, a bond or indeed any other type of asset. Options themselves are classified by their type, class and their series. The most important distinc- tion of types is between put options and call options. A put option gives the owner the right to sell the underlying asset at specified dates at a specified price. A call option gives the owner the right to buy at specified dates at a specified price. Options are different from forward/futures contracts as a put (call) option gives the owner right to sell (buy) the underlying asset but not an obligation. The right to buy or sell need not be exercised.
  • Sales Representatives Manual 2020

    Sales Representatives Manual 2020

    Sales Representatives Manual Volume 4 2020 Volume 4 Table of Contents Chapter 1 Overview of Derivatives Transactions ………… 1 Chapter 2 Products of Derivatives Transactions ……………99 Derivatives Transactions and Chapter 3 Articles of Association and ……………… 165 Various Rules of the Association Exercise (Class-1 Examination) ……………………………………… 173 Chapter 1 Overview of Derivatives Transactions Introduction ∙∙∙∙∙∙∙∙ 3 Section 1. Fundamentals of Derivatives Transactions ∙∙∙∙∙∙∙∙ 10 1.1 What Are Derivatives Transactions? ∙∙∙∙∙∙∙∙ 10 Section 2. Futures Transactions ∙∙∙∙∙∙∙∙ 10 2.1 What Are Futures Transactions? ∙∙∙∙∙∙∙∙ 10 2.2 Futures Price Formation ∙∙∙∙∙∙∙∙ 14 2.3 How to Use Futures Transactions ∙∙∙∙∙∙∙∙ 17 Section 3. Forward Transactions ∙∙∙∙∙∙∙∙ 24 3.1 What Are Forward Transactions? ∙∙∙∙∙∙∙∙ 24 Section 4. Option Transactions ∙∙∙∙∙∙∙∙ 25 4.1 What Are Options Transactions? ∙∙∙∙∙∙∙∙ 25 4.2 Options’ Price Formation ∙∙∙∙∙∙∙∙ 32 4.3 Characteristics of Options Premiums ∙∙∙∙∙∙∙∙ 36 4.4 Sensitivity of Premiums to the Respective Factors ∙∙∙∙∙∙∙∙ 38 4.5 How to Use Options ∙∙∙∙∙∙∙∙ 46 4.6 Option Pricing Theory ∙∙∙∙∙∙∙∙ 57 Section 5. Swap Transactions ∙∙∙∙∙∙∙∙ 63 5.1 What Are Swap Transactions? ∙∙∙∙∙∙∙∙ 63 Section 6. Risks in Derivatives Transactions ∙∙∙∙∙∙∙∙ 72 Conclusion ∙∙∙∙∙∙∙∙ 82 Introduction Introduction 1. History of Derivatives Transactions Chapter 1 The term “derivatives” is used for financial instruments that “derive” from financial assets, meaning those that have securities such as shares or bonds as their underlying assets or financial transactions that use a reference indicator such as interest rates or exchange rates. Today the term “derivative” is used widely throughout society and not just on the financial markets. Although there has been criticism that they amplify financial risks and have a harmful impact on the Chapter 2 economy, derivatives are an indispensable requirement in supporting finance in the present age, and have become accepted as the leading edge of financial innovation.
  • 11 Option Payoffs and Option Strategies

    11 Option Payoffs and Option Strategies

    11 Option Payoffs and Option Strategies Answers to Questions and Problems 1. Consider a call option with an exercise price of $80 and a cost of $5. Graph the profits and losses at expira- tion for various stock prices. 73 74 CHAPTER 11 OPTION PAYOFFS AND OPTION STRATEGIES 2. Consider a put option with an exercise price of $80 and a cost of $4. Graph the profits and losses at expiration for various stock prices. ANSWERS TO QUESTIONS AND PROBLEMS 75 3. For the call and put in questions 1 and 2, graph the profits and losses at expiration for a straddle comprising these two options. If the stock price is $80 at expiration, what will be the profit or loss? At what stock price (or prices) will the straddle have a zero profit? With a stock price at $80 at expiration, neither the call nor the put can be exercised. Both expire worthless, giving a total loss of $9. The straddle breaks even (has a zero profit) if the stock price is either $71 or $89. 4. A call option has an exercise price of $70 and is at expiration. The option costs $4, and the underlying stock trades for $75. Assuming a perfect market, how would you respond if the call is an American option? State exactly how you might transact. How does your answer differ if the option is European? With these prices, an arbitrage opportunity exists because the call price does not equal the maximum of zero or the stock price minus the exercise price. To exploit this mispricing, a trader should buy the call and exercise it for a total out-of-pocket cost of $74.
  • A Glossary of Securities and Financial Terms

    A Glossary of Securities and Financial Terms

    A Glossary of Securities and Financial Terms （English to Traditional Chinese） 9-times Restriction Rule 九倍限制規則 24-spread rule 24 個價位規則 1 A AAAC see Academic and Accreditation Advisory Committee【SFC】 ABS see asset-backed securities ACCA see Association of Chartered Certified Accountants, The ACG see Asia-Pacific Central Securities Depository Group ACIHK see ACI-The Financial Markets of Hong Kong ADB see Asian Development Bank ADR see American depositary receipt AFTA see ASEAN Free Trade Area AGM see annual general meeting AIB see Audit Investigation Board AIM see Alternative Investment Market【UK】 AIMR see Association for Investment Management and Research AMCHAM see American Chamber of Commerce AMEX see American Stock Exchange AMS see Automatic Order Matching and Execution System AMS/2 see Automatic Order Matching and Execution System / Second Generation AMS/3 see Automatic Order Matching and Execution System / Third Generation ANNA see Association of National Numbering Agencies AOI see All Ordinaries Index AOSEF see Asian and Oceanian Stock Exchanges Federation APEC see Asia Pacific Economic Cooperation API see Application Programming Interface APRC see Asia Pacific Regional Committee of IOSCO ARM see adjustable rate mortgage ASAC see Asian Securities' Analysts Council ASC see Accounting Society of China 2 ASEAN see Association of South-East Asian Nations ASIC see Australian Securities and Investments Commission AST system see automated screen trading system ASX see Australian Stock Exchange ATI see Account Transfer Instruction ABF Hong
  • Spread Scanner Guide Spread Scanner Guide

    Spread Scanner Guide Spread Scanner Guide

    Spread Scanner Guide Spread Scanner Guide ..................................................................................................................1 Introduction ...................................................................................................................................2 Structure of this document ...........................................................................................................2 The strategies coverage .................................................................................................................2 Spread Scanner interface..............................................................................................................3 Using the Spread Scanner............................................................................................................3 Profile pane..................................................................................................................................3 Position Selection pane................................................................................................................5 Stock Selection pane....................................................................................................................5 Position Criteria pane ..................................................................................................................7 Additional Parameters pane.........................................................................................................7 Results section .............................................................................................................................8
  • Macquarie Dynamic Carry Bull/Bear Commodities Spread Index Index Manual January 2021

    Macquarie Dynamic Carry Bull/Bear Commodities Spread Index Index Manual January 2021

    Macquarie Dynamic Carry Bull/Bear Commodities Spread Index Index Manual January 2021 1 NOTES AND DISCLAIMERS BASIS OF PROVISION This document (the Index Manual) sets out the rules for the Macquarie Dynamic Carry Bull/Bear Spread Commodities Index (the Index) and reflects the methodology for determining the composition and calculation of the Index (the Methodology). The Methodology and the Index derived from this Methodology are the exclusive property of Macquarie Bank Limited (the Index Administrator). The Index Administrator owns the copyright and all other rights to the Index. They have been provided to you solely for your internal use and you may not, without the prior written consent of the Index Administrator, distribute, reproduce, in whole or in part, summarize, quote from or otherwise publicly refer to the contents of the Methodology or use it as the basis of any financial instrument. SUITABILITY OF INDEX The Index and any financial instruments based on the Index may not be suitable for all investors and any investor must make an independent assessment of the appropriateness of any transaction in light of their own objectives and circumstances including the potential risks and benefits of entering into such a transaction. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This Index Manual assumes the reader is a sophisticated financial market participant, with the knowledge and expertise to understand the financial mathematics and derived pricing formulae, as well as the trading concepts, described herein. Any financial instrument based on the Index is unsuitable for a retail or unsophisticated investor.
  • Problem 9.9 Suppose That a European Call Option to Buy a Share for $100.00 Costs $5.00 and Is Held Until Maturity

    Problem 9.9 Suppose That a European Call Option to Buy a Share for $100.00 Costs $5.00 and Is Held Until Maturity

    Problem 9.9 Suppose that a European call option to buy a share for $100.00 costs $5.00 and is held until maturity. Under what circumstances will the holder of the option make a profit? Under what circumstances will the option be exercised? Draw a diagram illustrating how the profit from a long position in the option depends on the stock price at maturity of the option. Ignoring the time value of money, the holder of the option will make a profit if the stock price at maturity of the option is greater than $105. This is because the payoff to the holder of the option is, in these circumstances, greater than the $5 paid for the option. The option will be exercised if the stock price at maturity is greater than $100. Note that if the stock price is between $100 and $105 the option is exercised, but the holder of the option takes a loss overall. The profit from a long position is as shown in Figure S9.1. Figure S9.1 Profit from long position in Problem 9.9 Problem 9.10 Suppose that a European put option to sell a share for $60 costs $8 and is held until maturity. Under what circumstances will the seller of the option (the party with the short position) make a profit? Under what circumstances will the option be exercised? Draw a diagram illustrating how the profit from a short position in the option depends on the stock price at maturity of the option. Ignoring the time value of money, the seller of the option will make a profit if the stock price at maturity is greater than $52.00.
  • EQUITY DERIVATIVES Faqs

    EQUITY DERIVATIVES Faqs

    NATIONAL INSTITUTE OF SECURITIES MARKETS SCHOOL FOR SECURITIES EDUCATION EQUITY DERIVATIVES Frequently Asked Questions (FAQs) Authors: NISM PGDM 2019-21 Batch Students: Abhilash Rathod Akash Sherry Akhilesh Krishnan Devansh Sharma Jyotsna Gupta Malaya Mohapatra Prahlad Arora Rajesh Gouda Rujuta Tamhankar Shreya Iyer Shubham Gurtu Vansh Agarwal Faculty Guide: Ritesh Nandwani, Program Director, PGDM, NISM Table of Contents Sr. Question Topic Page No No. Numbers 1 Introduction to Derivatives 1-16 2 2 Understanding Futures & Forwards 17-42 9 3 Understanding Options 43-66 20 4 Option Properties 66-90 29 5 Options Pricing & Valuation 91-95 39 6 Derivatives Applications 96-125 44 7 Options Trading Strategies 126-271 53 8 Risks involved in Derivatives trading 272-282 86 Trading, Margin requirements & 9 283-329 90 Position Limits in India 10 Clearing & Settlement in India 330-345 105 Annexures : Key Statistics & Trends - 113 1 | P a g e I. INTRODUCTION TO DERIVATIVES 1. What are Derivatives? Ans. A Derivative is a financial instrument whose value is derived from the value of an underlying asset. The underlying asset can be equity shares or index, precious metals, commodities, currencies, interest rates etc. A derivative instrument does not have any independent value. Its value is always dependent on the underlying assets. Derivatives can be used either to minimize risk (hedging) or assume risk with the expectation of some positive pay-off or reward (speculation). 2. What are some common types of Derivatives? Ans. The following are some common types of derivatives: a) Forwards b) Futures c) Options d) Swaps 3. What is Forward? A forward is a contractual agreement between two parties to buy/sell an underlying asset at a future date for a particular price that is pre‐decided on the date of contract.
  • Table of Contents

    Table of Contents

    Trading Spreads and Seasonals Chapter 1 What Is a “Spread?” If you already know what a spread is, you may be tempted to skip this initial chapter. However, I advise against it. Besides being presented for those who know, it is presented here for those who are not sure, and also for those who know that they know that they don’t know. I have been amazed at the number of traders who show up at my seminars who do not know what a spread is. Additionally, they do not know its numerous purposes or its many uses. A Spread is... For purposes of this book, a spread is defined as the sale of one or more futures contracts and the purchase of one or more offsetting futures contracts. You can turn that around and state that a spread is the purchase of one or more futures contracts and the sale of one or more offsetting futures contracts. A spread is also created when a trader owns (is long) the physical vehicle and offsets by selling (going short) futures. However, this course will not cover the long physicals, short futures types of spreads. Furthermore, for purposes of this course, a spread is defined as the purchase and sale of one or more offsetting futures contracts normally recognized as a spread by the futures exchanges. This explicitly excludes those exotic spreads that are put forth by some vendors but are nothing more than computer generated coincidences which will not be treated as spreads by the exchanges. Such exotic spreads as long Trading Spreads and Seasonals Bond futures and short Bean Oil futures may show up as reliable computer generated spreads, but they are not recognized as such by the exchanges, and are in the same category with believing the annual performance of the US stock market is somehow related to the outcome of a sporting event.
  • INTRODUCTION to COTTON FUTURES Blake K

    INTRODUCTION to COTTON FUTURES Blake K

    INTRODUCTION TO COTTON FUTURES Blake K. Bennett Extension Economist/Management Texas Cooperative Extension, The Texas A&M University System Introduction For well over a century, industry representatives have joined traders and investors in the New York Board of Trade futures markets to engage in price discovery, price risk transfer and price distribution of cotton. In fact, the first cotton futures market contracts were traded in New York in 1870. From that time, the cotton futures market has grown in use, but still provides the same services it did when trading began. For the novice, futures market trading may seem chaotic. However there is a reason for every movement, gesture, and even the color of jacket the traders wear on the trading floor. All these elements come together to provide the world a centralized location where demand and supply forces are taken into consideration and market prices are determined for commodities. Having the ability to take advantage of futures market contracts as a means of shifting price risk is a valuable tool for producers. While trading futures market contracts may be a relatively easy task to undertake, understanding the fundamental concept behind how these contracts are used from a price risk management standpoint is essential before trading begins. This booklet will assist cotton producers interested in gaining or furthering their knowledge in terms of using futures contracts to hedge cotton price risk. Who Are The Market Participants? Any one person, group of persons, or firm can trade futures contracts. Generally futures market participants fall into two categories. These categories are hedgers and speculators.
  • Options: Definitions, Payoffs, & Replications

    Options: Definitions, Payoffs, & Replications

    Options: Definitions, Payoffs, & Replications Liuren Wu Zicklin School of Business, Baruch College Options Markets Liuren Wu (Baruch) Payoffs Options Markets 1 / 34 Definitions and terminologies An option gives the option holder the right/option, but no obligation, to buy or sell a security to the option writer/seller I for a pre-specified price (the strike price, K) I at (or up to) a given time in the future (the expiry date) An option has positive value. Comparison: a forward contract has zero value at inception. Option types I A call option gives the holder the right to buy a security. The payoff is + (ST − K) when exercised at maturity. I A put option gives the holder the right to sell a security. The payoff is + (K − ST ) when exercised at maturity. I American options can be exercised at any time priory to expiry. I European options can only be exercised at the expiry. Liuren Wu (Baruch) Payoffs Options Markets 2 / 34 More terminologies Moneyness: the strike relative to the spot/forward level I An option is said to be in-the-money if the option has positive value if exercised right now: F St > K for call options and St < K for put options. F Sometimes it is also defined in terms of the forward price at the same maturity (in the money forward): Ft > K for call and Ft < K for put F The option has positive intrinsic value when in the money. The + + intrinsic value is (St − K) for call, (K − St ) for put. F We can also define intrinsic value in terms of forward price.
  • Notes & Comments

    Notes & Comments

    NOTES & COMMENTS THE TAX-STRADDLE CASES The use of commodity futures "straddle" or "spread" transactions to reduce tax burdens is a time-honored practice.' Because of their in- creased popularity over the past decade, tax straddles have recently re- ceived a great deal of attention from the Treasury Department2 and from Congress.3 The Treasury Department has issued revenue rulings disapproving of the practice 4 and has challenged thousands of tax re- turns in which taxpayers offset losses generated by straddle transactions against other income. 5 In the first case to reach trial, Smith v. Commis- sioner,6 the United States Tax Court denied the straddle losses claimed by the taxpayers because the taxpayers lacked the requisite profit mo- 1. 12 TAX NOTES 209, 209 (1981) (testimony of Secretary of the Treasury Donald T. Regan at his confirmation hearing before the Senate Finance Committee (Jan. 6, 1981)). 2. See IRS, EXAMINATION TAX SHELTERS HANDBOOK, reprinted in Silver Prices and the Adequacy ofFederalActions in the Marketplace,1978-80. HearingsBefore the Subcomm. on Com- merce, Consumer and Monetary Affairs of the House Comm on Government Operations, 96th Cong., 2d Sess. 368-69 (1980) (hereinafter cited as Silver Prices); Lewis, The Treasury'r Latest Attack on Tax Shelters, I1 TAX NOTES 723, 723 (1980). 3. See Economic Recovery Tax Act of 1981, Pub. L. No. 97-34, §§ 501-509, 95 Stat. 172. This statute dramatically alters the tax treatment of commodity futures transactions by prospec- tively eliminating the claimed losses from tax straddles. Section 503 of the Act requires unrealized gains and losses in open futures positions to be valued by referral to their market prices on the last day of the tax year and to adjust taxable income accordingly.