Position Limit
The maximum number of futures contracts a single trader or entity may hold, set by the CFTC and/or the exchange to prevent market manipulation.
A position limit is a regulatory cap on the maximum net long or net short futures exposure a single trader or affiliated group may hold. Limits are set by the CFTC (for spot-month) and exchanges (for all months combined) to prevent corners, squeezes, and manipulation.
Spot-month limits are most stringent and kick in during the delivery period when the market is thinner and more vulnerable to manipulation. Commercially exempt hedgers can apply for exemptions above these limits.
Retail traders rarely approach position limits; they matter to large hedge funds, CTAs, and commercial hedgers operating at scale.
Related Terms
Hedger
A market participant using futures to offset price risk in an existing exposure — the opposite of a speculator.
IntermediateOpen Interest
The total number of outstanding futures contracts that have not been settled, delivered, or offset. A measure of market participation.
IntermediateSpeculator
A market participant who takes on futures risk with no underlying physical exposure, seeking to profit from price moves.
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