PTBF - Seller's call contracts
- Generally are written to allow the price to be fixed by the seller prior to the first notice day for the specified futures contract.
- Allow the seller to ask the buyer to fix the contract price based on the futures price ruling at the time (therefore does not require the seller to have a futures trading account).
PTBF - Buyer's call contracts
- Sometimes allow the buyer to fix the price any time before the delivery of the physicals, but usually before the first notice day of the specified futures contract.
- Allow the buyer to ask the seller to fix the contract price based on the futures price ruling at the time (therefore, does not require the buyer to have a futures trading account).
This means that the hedging operation is built into the transaction for the physical coffee but the hedge remains to be executed - the transaction price has not yet been fixed. Knowing how prices are fixed makes it easier to fully understand this principle.