What does Seller’s Call mean?
Seller’s call refers to the right of the seller to fix the price of the commodity at a certain future date. In such a case, an agreement is entered into by the buyer and a seller for a specific commodity of a predetermined quality and quantity. The agreement allows the seller to fix the contract price at a number of points above or below the futures price. It is also known as a “call purchase”. It is the exact opposite of “buyer’s call”.
Futures Knowledge Explains Seller’s Call
For example, ABC enters into a futures contract with XYZ to buy 1000 quintals of cotton of grade A. XYZ, the seller, will have the right to fix the price at the time of delivery which may be some points lower/higher than the futures price.