Strong Hands

Posted in Finance, Accounting and Economics Terms, Total Reads: 978

Definition: Strong Hands

When the term is used in association with delivery of commodities on futures contracts, the term typically means that the party has an intention of receiving the delivery and preserve ownership of the commodity. The term, when used in association with futures positions, the term commonly means that the individual or firm is a well-financed speculator. This permits the person or the firm to engage in possibly riskier, or at least larger trades than most other investors on the futures market.

Nearly 2% of futures-contract holders only ever essentially take possession of the underlying commodity. They more or less always close out their position (most likely by offsetting their position) prior to the contract's stated delivery date. A strong hand is a future’s contract holder who is likely will and willing to take possession of the underlying commodity. They are a clear minority in futures trading.


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