Reciprocal limited risk contracts and system for exchanging same
First Claim
1. A system of trading futures, comprising the steps of:
- selecting an underlying market having a present value, wherein the present value is a quoted point of the underlying market,determining a cap stop value, the cap stop value a number higher than the present value,determining a floor stop value, the floor stop value a number lower than the present value such that the cap stop value and the floor stop value form a bracket around the present value,listing the bracket,opening a contract based on the bracket, the contract opened at an opening value wherein the opening value is the present value at the time of opening, andstopping the contract if a stop is triggered,wherein the stop is triggered if the present value equals the cap stop value or the floor stop value.
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Accused Products
Abstract
A bracket trade is provided wherein a bracket trade is a reciprocal risk limitation futures contract with two stops placed at determined levels on either side of a present value of an underlying market, so a possible range in which the exchange'"'"'s quotation can move once the trade has been opened is ‘bracketed’ by these two levels. The brackets function as trigger stops. If the stop or limit is triggered, the position is closed at exactly that level without slippage. As a result, in respect of an underlying market that is traded 24 hours a day the bracket trade has a delta of 1 regardless of the fluctuations of the underlying market or proximity of the exchange'"'"'s quotation to the brackets; and where the underlying is not traded 24 hours a day the bracket trade will have a delta of 1 on the expiry day of the contract. Bracket trades provide a means by which exchange members can trade at a transparent market price but with the safety of a limited risk stop.
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Citations
35 Claims
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1. A system of trading futures, comprising the steps of:
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selecting an underlying market having a present value, wherein the present value is a quoted point of the underlying market, determining a cap stop value, the cap stop value a number higher than the present value, determining a floor stop value, the floor stop value a number lower than the present value such that the cap stop value and the floor stop value form a bracket around the present value, listing the bracket, opening a contract based on the bracket, the contract opened at an opening value wherein the opening value is the present value at the time of opening, and stopping the contract if a stop is triggered, wherein the stop is triggered if the present value equals the cap stop value or the floor stop value. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12)
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13. A web-based, computer implemented method of bracket trading on an exchange, comprising the steps of:
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opening a contract, the contract opened at a present value of an underlying market between two bracket stop values, wherein the two bracket stop values form a bracket and correspond to potential values of the underlying market, and wherein the present value fluctuates in correlation to fluctuations in the underlying market, and stopping the contract when the present value equals either of the two bracket stop values, wherein that a delta of the contract is always 1 on the expiry day. - View Dependent Claims (14, 15, 16, 17, 18, 19, 20, 21, 22)
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24. An exchange for trading a financial instrument comprising:
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a web-based interface for accepting inputs from at least one exchange member, means for listing a bracket on the interface, the bracket including two bracket stop values such that a present value of a selected underlying market is between the two bracket stop values, wherein the two bracket stop values correspond to potential values of the underlying market, and wherein the present value fluctuates in correlation to fluctuations in the underlying market, means to open a contract with input from the at least one exchange member, the contract having risk and profit take limitations that correspond to the two bracket stop values, and means to stop the contract at a moment where the present value equals one of the two bracket values. - View Dependent Claims (25, 26, 27)
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28. A futures contract, comprising:
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a first bracket stop value corresponding to a first potential value of an underlying market, the underlying market having a present value wherein the present value fluctuates in correlation to fluctuations in the underlying market, a second bracket stop value corresponding to a second potential value of the underlying market, an opening value, wherein the opening value is the present value of the underlying market at the time of an opening of the futures contract, the present value between the first and second potential values, and a stop trigger, wherein the stop trigger stops the contract when the present value equals either of the two bracket stop values, wherein a delta of the futures contract is always 1 on the expiry day. - View Dependent Claims (29, 30, 31, 32, 33, 34, 35)
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Specification