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Quantitative Finance · Glossary

What is Limit-locked market, expanded limit?

Also known as: limit-locked market · expanded limit

Definition 9.4 Markets III: Commodities, Energy and Crypto · Chapter 9 — Agriculturals and Softs

A limit-locked market is one whose price has reached the daily limit with orders on one side only: no trade can happen at a price beyond it, so positions cannot be closed. An expanded limit is the wider limit that applies on the day after a contract settles at its limit.

Corn after a report that cuts its fair value from $4.50 to $3.70 a bushel: two locked days at the limit and the expanded limit, then trading at the fair price. Illustrative; limits by the rule of the dated box. Data: the chapter’s tutorial.
Figure 9.2. Corn after a report that cuts its fair value from $4.50 to $3.70 a bushel: two locked days at the limit and the expanded limit, then trading at the fair price. Illustrative; limits by the rule of the dated box. Data: the chapter’s tutorial.
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