Retender

We just love futures. Not the tea-leaves-and-crystal-balls kind of futures, though those are, um...neat in their own right...but the investing-in-commodities kind of futures. And, hands down, our favorite commodity is corn. But just because we like investing in corn futures, that doesn’t mean we necessarily want to take delivery of a shipping container full of corn when we buy a corn futures contract. Seriously, what would we do with all that corn? Which is why it’s so great that retenders exist.

Usually, we can just sell a long futures contract before it expires and avoid the whole physical-delivery issue altogether. But if we don’t sell before that magical date, we’ll receive a notice of delivery, which means the corn is...coming. A “retender” happens when we sell the delivery notice for the underlying asset tied to our futures contract. In plain English, this means that we don’t have to take physical possession of the corn because we’ve sold the actual corn delivery to someone else. Which is good, because we’re pretty sure our HOA has rules against having huge crates of corn in our driveway.