What it is:
Position limit refers to the ceiling placed on the number of contracts on a single security which may be held by an individual or cooperative group.
How it works (Example):
Determined by the Commodity Futures Trading Commission (CFTC), position limits place an upper limit on the number of contracts which an investor or combined group of investors may hold for a specific security. For instance, the CFTC may specify a position limit of no more than 15 contracts per investing party on stock XYZ.