COT report

The COT report is a weekly publication from the Commodity Futures Trading Commission that breaks down open positions in US futures markets by the type of trader holding them. It shows how much of the long and short interest in a given futures market is held by commercial hedgers, large speculators such as hedge funds, and smaller traders, giving a snapshot of who is positioned which way across everything from crude oil to stock index futures to currencies.

Commercial traders are typically businesses using futures to hedge a real exposure, an airline hedging fuel costs or a farmer hedging a crop, and their positioning is often viewed as reflecting the fundamentals of the underlying market. Large speculators are financial players expressing a view on price direction rather than hedging an underlying business, and heavy buildups in their positioning are sometimes read as a sign that a market has become crowded on one side of the trade.

Traders who follow the COT report often look for extremes, a positioning level far outside its historical range, as a contrarian signal that a market may be due for a reversal once one side of the trade becomes overcrowded. The report is released with a short lag and only shows positioning as of the prior week, so it works better as a read on sentiment and crowding over time than as a timing tool for any single trade.