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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated August 5, 2020

What is a Call Rule?

The call rule is a rule that requires the official opening price of a cash commodity to be near the previous day's closing price of that commodity.

How Does a Call Rule Work?

For example, let's assume that on June 1, the price of gold is $1,000 an ounce at the end of the trading day. Using the call rule, the opening price of gold must be $1,000 an ounce on June 2 (or the next trading day if June 2 falls on a weekend or trading holiday).

Why Does a Call Rule Matter?

Thought it seems intuitive that yesterday's closing price should be today's opening price, it wasn't always that way. The Commodity Futures Trading Commission (CFTC) established the call rule because traders were making private bids among each other overnight, which wildly altered opening prices the next day. In 1906, the Chicago Board of Trade (CBOT) adopted the rule, and the Supreme Court affirmed the legality of the call rule in 1918.

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