Tomorrow Next (Tom Next)

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Definition of 'Tomorrow Next (Tom Next)'

Tomorrow Next (Tom Next) is a financial derivative that is based on the price of a stock index. It is a type of forward contract, which means that it is an agreement to buy or sell an asset at a future date at a predetermined price.

The main difference between Tomorrow Next and a traditional forward contract is that Tomorrow Next is settled in cash, rather than by the delivery of the underlying asset. This makes Tomorrow Next a more liquid instrument, as it can be traded on an exchange.

Tomorrow Next is often used by investors to hedge their exposure to the stock market. For example, an investor who is worried about a decline in the stock market could buy a Tomorrow Next on the S&P 500 index. This would protect them from any losses if the index falls, but they would miss out on any gains if the index rises.

Tomorrow Next can also be used by traders to speculate on the future direction of the stock market. For example, a trader who believes that the stock market is going to rise could buy a Tomorrow Next on the S&P 500 index. If the index does rise, the trader will make a profit. However, if the index falls, the trader will lose money.

Tomorrow Next is a relatively new financial instrument, and it is still not widely used. However, it is gaining in popularity, and it is likely to become a more important part of the financial markets in the future.

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