What Factors Affect a Price Cap?

The price change limit refers to the limit imposed by the exchange on the daily price fluctuations of futures contracts in order to reduce the risk and reduce the impact of accidental short-term factors. Among them, the daily limit is a static price limit. This limit method is based on the closing price or settlement price of the previous trading day and multiplying a predetermined ratio (such as 3%). The highest and lowest value of the day of the contract. If the market price exceeds this value during trading, it will automatically stop. Temporary suspension of trading for this contract.

Price change limit

Right!

The price change limit refers to the limit imposed by the exchange on the daily price fluctuations of futures contracts in order to reduce the risk and reduce the impact of accidental short-term factors. Among them, the daily limit is a static price limit. This limit method is based on the closing price or settlement price of the previous trading day and multiplying by a predetermined ratio (such as 3%). The highest and lowest value of the day of the contract. If the market price exceeds this value during trading, it will automatically stop. Temporary suspension of trading for this contract.

Application analysis of price change limits

With the development and improvement of its market, the exchange has gradually increased the variable price limit. For example, the Hainan China Merchants Futures Exchange stipulates that the daily limit of palm oil and natural rubber will be ± 200 yuan per ton and ± 400 yuan at the settlement price of the previous trading day. For coffee and cocoa, the price per hundred kilograms reached ± 100 yuan and ± 50 yuan of the settlement price of the previous trading day. However, if the trading quotation for a three or all month contract of a listed product reaches the stoppage amount in one day and there is no transaction for at least 10 minutes, the stoppage amount will increase by 50%; if this occurs for three consecutive trading days Phenomenon, the trading of the listed product will be stopped until the exchange deems it recoverable. If the trading quotation of a certain month contract of a listed product reaches the suspension amount for three consecutive trading days and there is no transaction, the suspension amount will increase by 50% on the fourth trading day. After entering the delivery month, the price fluctuation limit contract system of the contract is automatically cancelled.