~ Chicago Board of Trade

The Important Role of Hand Signals

The use of hand signals is an aspect of futures
trading that has always fascinated the public.
Surprisingly, the Rules and Regulations of the
Chicago Board ofTrade don't specifically require
hand signals during open outcry trading. But,
in most active markets, hand signals are indispens-
able in clarifying verbal bids and offers. Not using
hand signals or using them incorrectly can lead
to costly mistakes.
Hand signals indicate price and quantity as well as
whether a trader is buying or selling. A trader has
the palm of his hand facing inward if he is buying
and outward if he is selling.
BUY
T
.
l
SELL
I ,
Designating Quantity in
Financial and Agricultural
Futures and Options
Futures and options traders call out quantity
during open outcry trading to indicate the number
of contracts they want to buy or sell. To ensure
accuracy, they also express quantity through basic
hand signals, as illustrated below.
1 CONTRACT 2 CONTRACTS


3 CONTRACTS 4 CONTRACTS
I 2
5 CONTRACTS 6 CONTRACTS


7 CONTRACTS 8 CONTRACTS


9 CONTRACTS 10 CONTRACTS
continued on page 4
I 3
20 CONTRACTS 30 CONTRACTS
80 CONTRACTS 90 CONTRACTS


------


40 CONTRACTS 50 CONTRACTS
100 CONTRACTS 1,000 CONTRACTS


60 CONTRACTS 70 CONTRACTS
I 4 I 5
Combining Quantities in
Financial and Agricultural
Futures and Options
To indicate compound quantities, such as 16
contracts or 28 contracts, traders use a combination
ofhand signals.
For example, when signaling 16 contracts, the
index finger is held vertically to the forehead to
indicate 10 contracts, and then the finger is placed
horizontally to the chin to indicate 6
a total of 16 contracts.
Likewise, for 28 contracts, two fingers are held
vertically to the forehead to indicate 20 contracts,
and then 3 fingers are held horizontally to the chin
to indicate 8 for a total of 28 contracts.
I 6
10 CONTRACTS 6 CONTRACTS
10+6=16
20 CONTRACTS 8 CONTRACTS
20 + 8 = 28
Indicating Price in Financial
Futures and Options
Futures
Pricing in Treasury bonds and 10-year notes is in
points and 32nds. Each point is valued at $1,000
and each 32nd at $31.25. Because each interval
between 1/ 32 and 31/ 32 needs to be signaled, many
of the hand signals are repeated at various price
intervals. Oftentimes, traders alternate vertical
and horizontal gestures to clearly differentiate
prices, i.e., 1/32 is indicated by the index finger
held vertically, but 6/ 32 is shown by the index
finger held horizontally.
A very common price interval is the move between
31/32 and 1/ 32. It may be traced and retraced
numerous times in a single day. To minimize
confusion, it is customary that 31/ 32 is signaled
with the pinky finger and that 1132 is signaled
with the index finger.
When the market is at even, e.g., 106-00, the
clenched fist is held vertically and moved from
side to side with the thumb extended to clearly
indicate a price of even.
It is critical that traders and brokers follow the
market carefully and be very clear with their
hand signals and open outcry.
1/32,11/32,21/32 2/32, 12/32, 22/32
I a
3/32,13/32,23/32 4/32, 14/32,24/32


5/32, 15/32, 25/32 6/32,16/32,26/32


7/32, 17/32,27/32 8/32,18/32,28/32
continued on page 10
I 9
9/32,19/32,29/32 10/32, 20/32


j
30/32 31/32


32/32 (EVEN)
I 10
Options
Because options are priced in ticks one half the
amount of the underlying futures, options on
Treasury bond and 10-year note futures are
priced in 64ths.
The hand signals for Treasury bond and 1 0-year
note options follow the same pattern as the under-
lying futures. The additional intervals require that
traders be careful to differentiate the prices
verbally, using the same signals.
For example:

I 11
9/64,19/64,29/64,39/64,
49/64, 59/64

Indicating Price in Grain
Futures and Options
Generally, traders signal only the last fraction of
the whole price. Grain futures are traded in ticks
of 1/4 cent per bushel. Options on grain futures
use ticks that are half those of the underlying
futures. This means ticks in options on soybeans,
corn, wheat, and oats are 1/8 cent.
In the grain markets, the price at which a trader
is making his bid or offer is usually shown by the
fingers held in a horizontal (sideways) position.
Futures
1/4 1/2


3/4 full cent
I 12
Options
1/8 2/8 or 1/4

.
-----
3/8 4/8 or 1/2

.
-.-.-.-. -
5/8 6/8 or 3/4

7/8 full cent
I 13
Combining Price and Quantity
Buyers indicate price first and then quantity.
Sellers do just the opposite, indicating quantity
first and then price.
Traders also use an important verbal distinction
that shows if they want to buy or sell. Buyers
bid price FOR quantity. Sellers offer quantity
AT price.
BOND EXAMPLE
Buyers Bid Price "for" Quantity
9/32 10 CONTRACTS
The outcry would be "9 for 10."
Sellers Offer Quantity "at" Price
10 CONTRACTS
9/32
The outcry would be "10 at 9."
I 14
SOYBEAN EXAMPLE
Buyers Bid Price "for" Quantity
FOR
1/4 CENT 20 CONTRACTS
The outcry would be "114 for 20."
Sellers Offer Quantity "at" Price
I
20 CONTRACTS
1/4 CENT
The outcry would be "20 at J/4."
I 15
Indicating Price in CBOT DJIAsM
Futures
When indicating quantity, CBOT DJINM futures
traders use the standard quantity signals depicted
on pages 2 to 7.
CBOT DJIA
5
M futures contracts trade in points,
with one point valued at $10. A quote of7825, for
example, indicates a value of $78,250.
Price is indicated away from the face, using price
signals based on the standard financial price
signals. Since the point value is only $10, the
prices can move quickly and the bid-ask spread
can be wide. Therefore, the CBOT DJINM hand
signals are unique in several ways.
It is important for CBOT DJINM traders to use
the last two digits of the price when indicating a
bid or offer. For example, if the bid is 7825 and
the offer is at 7830, the bid should be indicated
by "25" and the offer should be indicated by "30"
in both open outcry and hand signals.
First, let's look at signals for prices ending in "0"
or "5." Note: When signaling a price ending in "0,"
the finger(s) starts straight and then is bent down.
For prices ending in "5," the finger(s) is bent and
wiggled continuously. In these examples, the
market is trading in the 7800 range.
I 16
1 Extended finger(s) bent to fist
l Bent and wiggled continuously
7800 7805
.
1
7810 7815

.
1
7820 7825
continued on page 18
117
7830 7835 7870 7875

.
-----
l
7840 7845 7880 7885

.
----- -----
l
7850 7855 7890 7895

7860 7865
I 1s I 19
When the price ends in 1, 2, 3, 4, 6, 7, 8, or 9, the
trader still has to indicate the last two digits of the
price. He does so by making two distinct hand
signals while quickly moving his hand from left
to right in front of his body.
Following are examples of various bids with the
market trading in the 7800 range:
l
7820 bid, or "20 bid"
7823 bid, or "23 bid," moving the same hand in
front of his body
7825 bid, or "25 bid"
7828 bid, or "28 bid," moving the same hand in
front of his body
I 20
Indicating Price in CBOT DJIAsM
Options
The minimum price fluctuation for a CBOT
DJINM option contract is .05, or $5. Therefore,
premiums are quoted in points and .05 increments,
and dollar amounts are determined by multiplying
the premium by $100. A premium of 15.35 is
worth $1,535 and a premium of28.95 is
worth $2,895.
Following are illustrations of signals for the .05
increments. Signals that end in "5" are bent and
wiggled continuously to differentiate them from
the signals that end in "0."
EVEN .05

.10 .15
continued on page 22
I 21
.20 .25 .60 .65

. .
----- -----

.30 .35 .70 .75

.
-----
-----

.40 .45 .80 .85

. .
----- -----

.50 .55 .90 .95
I 22 I 23 .
When quoting an option's premium, however, the
trader must be careful to quote the whole premium,
not just the .05 increment. CBO'f DJINM option
traders incorporate the standard hand signals for
quantity (depicted on pages 2 to 7) when
signaling price.
The proper way to quote and signal a premium
of 15.35 is:
PREMIUM = 15.35
Likewise, the proper way to quote and signal a
premium of 28.95 is:
PREMIUM = 28.95
I 24
Designating Months in
Futures and Options
In all futures and options markets, it is some-
times necessary to signal the month of the contract
traded. Following are some of the hand signals
for contract months commonly seen on the trading
floor. Signals for months may vary from one
contract to another, so it is important to familiarize
yourself with the practice in your pit.
The letter symbols for each month are also shown.
These symbols are used to designate the month
when writing orders and trading cards.
January (F) February (G)

March (H) April (J)
continued on page 26
I 25
May(K) June (M)

July(N) August (Q)

.
-----
September (U) September (U)
I 26
October (V)
December (Z)
I 27
November (X)

.
EM91-4
1995, 1998, Board ofTrade of the City of Chicago
The information in this publication is taken from sources believed
to be reliabl e, but it is not guaranteed by the Chicago Board of
Trade as to accuracy or completeness, nor any trading result, and
is intended for purposes of information and education only. The
Rul es and Regulations of the Chi cago Board ofTrade should be
consulted as the authoritative source on all current contract
specifications and regulations.
2.98.5000
L:-"----------'---28