TAPO (Traded Average Price Option)

Also known as an Asian Option. A cash settled instrument which is priced against a selection of prices (usually a single month) and settled on the basis of the difference between the strike price and the average price of the sampled period.


Either the delivery of the physical commodity against a futures contract or the competitive process whereby physical traders are invited to bid or offer for a defined supply contract.


The minimum permitted price fluctuation between one trade and the next on a futures market.


Within the LME normal two day settlement, a position may nevertheless have a prompt date one day forward. It can still be officially traded up to the first ring of that day under a facility known as Tom(orrow)-Next(day). This permits such positions to be rolled forward to the official cash date on payment of a negotiated rate.

Traded Option

An option contract based on standardised terms which can be traded to third parties or on an Exchange. The standard LME options contracts are traded option contracts.

Troy Ounce

Equal to 31.1035 g.


Precious metal held on account which represents a claim on a notional amount of metal. The metal is not held in actual bar form.


An LME term referring to a price which is traded in a volume sufficient to satisfy all the current buyers and sellers at that price.

Variation Margin

A request for additional funds (a margin call) to cover any losses on an open position, based on current market values. Variation margin is assessed and called for on a daily basis. An open position which is in profit against the current market has a positive margin, which can be used in assessing a client's credit position. On some cash cleared markets positive margin can be paid out to a client whose open position is in profit.


The total weight of a commodity traded in one day, expressed either in tonnes or lots. Also referred to as turnover.


The document of title to metal stored in an LME registered warehouse. A paper warrant is a bearer instrument and states the brand of metal, its weight, the number of pieces and the rent payable. These are in the process of being replaced by centrally-maintained electronic records under the LME's Sword system.

Zero Cost

Where the purchase of one option premium strike cancels out the income of a different premium strike so that no premium changes hands.