Ringing

out. This is an operation by which a transaction in a future in grain, cotton, coffee or other commodity may be concluded before the maturity of the contract. Illustration: A sells to B for delivery in some stipulated month in the future. B sells to C, C sells to D and D sells to A. Thus a ring is formed. Each has bought and sold and no actual delivery is required. In a transaction in a future each party to it (the buyer as well as the seller) deposits a margin with a designated de-: pository as security for the performance of his part of the contract. When the ring is complete a common settling price is fixed by the proper authority of the exchange on which the transaction took place.. Say A sold at 12 and bought back at 10 1-2—the difference is 1 1-2 in his favor. The settling price is 11, say. Since A sold to B at 12 he collects the difference between 12 and 11, which is 1, from B. Then, since he bought from D at Io 1-2 he collects the difference between 10 1-2 and 11, which is 1-2, from D. Thus, between B and D he collects his total difference. ' But suppose A had sold at 101-2 and bought back at 12. Then, he would pay B 1-2 and pay D 1.