THE PRICE OF WHEAT 243 



first buying, and then selling at a later date, is the term by 

 which the operations of this speculator are designated. He al- 

 ways desires a rise in price, and endeavors to bull the market 

 by buying. He operates on the "long" side of the market. 

 This speculator also contracts in the present to purchase wheat 

 at some future date at a price which he now fixes. Here also 

 he assumes the risk of a fall in price in the hope that he may 

 gain from a rise, for if the price rises above what he has 

 agreed to pay at the fixed future date, known as the date of 

 delivery, then he is able to sell his wheat on or before this date 

 at a higher price than he paid. In the present contract for 

 future purchase is involved one form of the transaction tech- 

 nically called the "future." This term is defined by Emery 

 as a "contract for the future delivery of some commodity, 

 without reference to specific lots, made under the rules of some 

 commercial body in a set form, by which the conditions as to the 

 unit of amount, the quality, and the time of delivery are stereo- 

 typed, and only the determination of the total amount and the 

 price is left open to the contracting parties." 



The other type of speculation is "bear" speculation, which 

 consists of first selling, and then buying at a later date. In 

 such speculation, the operator stands ready to sell wheat at 

 the current price for present delivery, or at a fixed price for 

 delivery at a given future date. This speculator assumes the 

 risk of a rise in price in the hope that he may gain from a fall 

 in price. His operations generally consist of selling in the pres- 

 ent for future delivery. Most frequently he owns no wheat at 

 the date of sale, but hopes to secure the contracted grain before 

 the date of delivery (which is called covering the sale), and at 

 a price below that at which he sold. He always desires a fall in 

 price, and endeavors to bear the market by selling. He operates 

 on the "short" side of the market, and his "short-sales" are 

 always "futures." 



Grain Privileges, or "Puts and Calls." Insurance against 

 loss in wheat transactions may be secured by buying a "put" 

 or a "call" from a maker of privileges. For example, if a 

 dealer is holding wheat that is worth 80 cents per bushel, for a 

 certain price he can buy the privilege of selling the wheat to 

 a speculator at 79^ cents per bushel during any period of 

 1 Speculation, p. 46. 



