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Term: Ringing Out
Definition: Ringing out is a way for commodities dealers to end contracts for future delivery before the actual delivery date. They do this by using offsets, cancellations, and price adjustments, which saves them the cost of actually delivering the goods and changing ownership. It's like canceling a plan before it happens, so you don't have to go through with it and spend money on it.
Definition: Ringing out is a method used by commodities dealers to discharge contracts for future delivery in advance. This is done by using offsets, cancellations, and price adjustments, which saves the cost of actual delivery and change of possession. It is also known as ringing up.
Example: Let's say a commodities dealer has a contract to deliver 100 barrels of oil in three months. However, they realize that they won't be able to fulfill the contract due to unforeseen circumstances. Instead of delivering the oil, they can use ringing out to discharge the contract by offsetting it with another contract or adjusting the price.
Explanation: In the example, the commodities dealer uses ringing out to avoid the cost of delivering the oil and changing possession. By offsetting the contract or adjusting the price, they can still fulfill their obligation without physically delivering the oil. This method is commonly used in commodities trading to avoid the costs and logistics of physical delivery.