Agricultural Index Futures and Options at the Minneapolis Grain Exchange

Size: px
Start display at page:

Download "Agricultural Index Futures and Options at the Minneapolis Grain Exchange"

Transcription

1 Agricultural Index Futures and Options at the Minneapolis Grain Exchange INDEX Advantages of Agricultural Index Futures Advantages of Agricultural Index Futures (con t) Contracts traded Index Futures Contract Specifications Quote Vendor Retrieval Codes Agricultural Spot Indexes Data Transmission Network (DTN) Spot Index Reporting Spot Index Calculation Spot Bids, Underlying Commodities Spot Bid Maps, by State The information contained in this publication is not meant to be construed as trading recommendations or advice of the Minneapolis Grain Exchange. Please consult the Rules and Regulations of the Minneapolis Grain Exchange for complete contract information and specifications. The Minneapolis Grain Exchange is not responsible for any errors or omissions.

2 Advantages of Index Futures Financial/cash settlement, no deliveries. When index futures and options expire, they settle to a financial value, eliminating deliveries. As a result, there are no delivery specifications, storage costs, grade differentials or load-out costs. Index based, country-origin pricing. DTN collects elevator bids daily, and in turn, calculates the spot indexes upon which MGEX agricultural index futures are settled. DTN gathers bids from a majority of U.S. elevators, and the indexes are an average of the prices in the country. The result: More accurate hedges, the opportunity to hedge basis and a market that tracks country cash values for commodities, not just a particular location. All calendar months traded. All months are listed so traders can more accurately hedge their needs and pay option premiums for only the months needed.

3 Advantages of Index Futures (con t) Hedging. MGEX index futures and options more closely track country prices because local basis is, in part, included in the index futures contract settlement price. For hedgers, this means their futures position will better reflect their cash position and provide a more accurate hedge. When paired with the fact that all months are traded, MGEX index contracts make a lot of sense in any hedging program. Electronic trading. MGEX agricultural index futures trade on an electronic platform that offers market transparency, instant execution and extended trading hours. Interclass wheat spreads marked-to-market, on a single platform. MGEX lists cash-settled futures on 3 classes of wheat hard red spring, hard red winter and soft red winter all on the e-cbot powered by LIFFE CONNECT platform. This gives the trader execution speed and efficiency in addition to marked-to-market margining.

4 Agricultural Index Futures and Options Contracts Traded MGEX electronically trades five cash-settled, agricultural futures and options contracts. The contracts are: National Corn Index (NCI) National Soybean Index (NSI) Hard Red Spring Wheat Index (HRSI) Hard Red Winter Wheat Index (HRWI) Soft Red Winter Wheat Index (SRWI) The contracts trade on the e-cbot powered by LIFFE CONNECT platform. Additionally, MGEX s deliverable hard red spring wheat contracts are traded electronically overnight on the platform.

5 Index Futures Contract Specifications NCI NSI Trading Hours 7:30 pm-:45 pm Sun-Fri 7:3 pm-:45 pm Sun-Fri HRSI, HRWI and SRWI 7:32 pm-:45 pm Sun-Fri Contract Unit 5,000 bushels 5,000 bushels 5,000 bushels Contract Months All twelve All twelve All twelve Tick Size ¼ cent per bushel ($0.0025) or $2.50 per contract ¼ cent per bushel ($0.0025) or $2.50 per contract ¼ cent per bushel ($0.0025) or $2.50 per contract Daily Price Limit $0.25 cents per bushel $0.60 cents per bushel $0.30 cents per bushel Last Trading Day Last business day of settlement month Last business day of settlement month Last business day of settlement month Settlement Settlement Date Ticker Symbol In cash, to simple average of DTN spot NCI for last three trading days of settlement month Business day following Last Trading Day IC In cash, to simple average of DTN spot NSI for last three trading days of settlement month Business day following Last Trading Day IS In cash, to simple average of DTN spot HRSI, HRWI or SRWI for last three trading days of settlement month Business day following Last Trading Day HRSI=IP; HRWI=IH; SRWI=IW Consult the "Rules and Regulations of the Exchange for complete contract specifications or call MGEX at or visit

6 Index Futures and Options Retrieval Codes VENDOR NCI NSI HRSI HRWI SRWI DTN and Prophet @IW CQG Futures XMC XMS MWI MRI MSI Options XMC XMS MWI MRI MSI FutureSource Futures NCI NSI SWI HW SRI Options NCI NSI SWI HW SRI For assistance retrieving MGEX Index quotes, contact your quote vendor. You may also find quotes and charts for MGEX Agricultural Index Futures and Options at:

7 Spot Agricultural Indexes INDEX Data Transmission Network (DTN) Spot Index Reporting Spot Index Calculation Spot Bids, Underlying Commodities Spot Bid Maps, by State

8 Data Transmission Network MGEX has a licensing agreement with DTN, a leading business-tobusiness provider of business information services, which enables them to cash settle futures and options to cash commodity indexes calculated by DTN. After the market close each day, DTN polls approximately 2,000 elevators to arrive at spot indexes for a variety of commodities.

9 DTN Spot Index Reporting DTN has been collecting data that comprise the spot indexes for several years. Elevator bids are collected by DTN beginning at approximately 2:00 p.m. (central time) each day and the spot indexes are posted by approximately 5:00 p.m. each day. You can find the daily index, and the number of indexes included in that day s average, at or on a DTN or ProphetX data terminal. You may download historical data for the DTN indexes by visiting: The DTN spot indexes are simple averages of the price data included, i.e., one elevator equal one vote.

10 Spot Index Calculations Simple average of country elevator bids for commodities. Index futures are settled to a three-day average of the spot DTN Index for the last three trading days of the month. Market participants may trade in and out of their futures and options positions at any time; however, open positions held through contract expiration will have a final settlement to the three-day average of the spot DTN Index. Positions are marked-to-market after the close on the last day of trade, and positions are settled in cash the following business day. Spot indexes and number of elevators included in the average are posted each day at:

11 Spot Bids, Underlying Commodity NCI NSI HRSI HRWI SRWI U.S. #2 yellow corn U.S. # yellow soybeans U.S. # hard red spring wheat U.S. # hard red winter wheat U.S. #2 soft red winter wheat

12 NCI Bid Map, By State, Typical Day

13 NSI Bid Map, By State, Typical Day Total =,732 2

14 HRSI Bid Map, By State, Typical Day Total = 233

15 HRWI Bid Map, By State, Typical Day Total = 457

16 SRWI Bid Map, By State, Typical Day Total = 382

17 More Information Teri Huffaker Minneapolis Grain Exchange 400 S. 4 th Street, Suite 30 Minneapolis, MN The information contained in this publication is not meant to be construed as trading recommendations or advice of the Minneapolis Grain Exchange. Please consult the Rules and Regulations of the Minneapolis Grain Exchange for complete contract information and specifications. The Minneapolis Grain Exchange is not responsible for any errors or omissions.

FINANCIALLY SETTLED, AGRICULTURAL INDEXES

FINANCIALLY SETTLED, AGRICULTURAL INDEXES FINANCIALLY SETTLED, AGRICULTURAL INDEXES N ow there s a new way to trade and manage price risk for MGEX agricultural index futures and options. From pricing advantages in options, to the ability to hedge

More information

Index futures contract features. Contract features. MGEX Agricultural Index. MGEX Agricultural Index Futures and Options

Index futures contract features. Contract features. MGEX Agricultural Index. MGEX Agricultural Index Futures and Options MGEX Agricultural Index Futures and Options 1 MGEX Agricultural Index Futures and Options Five agricultural indexes futures and options contracts: National Corn Index (NCI) National Soybean Index (NSI)

More information

MGEX Agricultural Index Futures and Options

MGEX Agricultural Index Futures and Options MGEX Agricultural Index Futures and Options 07 Crop Outlook and Int l Durum Forum Minot, ND 1 Thank you very much for having me here. I would like to acquaint you with a new set of risk management tools.

More information

EXAMINING FUTURES AND OPTIONS

EXAMINING FUTURES AND OPTIONS EXAMINING FUTURES AND OPTIONS TABLE OF 130 Grain Exchange Building 400 South 4th Street Minneapolis, MN 55415 www.mgex.com mgex@mgex.com 800.827.4746 612.321.7101 Fax: 612.339.1155 Acknowledgements We

More information

ICE Futures U.S., Inc. CASH-SETTLED US AGRICULTURAL FUTURES AND OPTIONS CONTRACTS

ICE Futures U.S., Inc. CASH-SETTLED US AGRICULTURAL FUTURES AND OPTIONS CONTRACTS ICE Futures U.S., Inc. CASH-SETTLED US AGRICULTURAL FUTURES AND OPTIONS CONTRACTS TABLE OF CONTENTS Rule Subject SUBCHAPTER A FUTURES CONTRACTS 14.00A Scope 14.01A Contract Size 14.02A Contract Months

More information

1 CASH SETTLED AGRICULTURAL CONTRACT SPECIFICATIONS - FUTURES

1 CASH SETTLED AGRICULTURAL CONTRACT SPECIFICATIONS - FUTURES 1 CASH SETTLED AGRICULTURAL CONTRACT SPECIFICATIONS - FUTURES FUTURES CONTRACT CHICAGO CORN CHICAGO WHEAT KCBT HARD RED Trading system code CORN REDW KANS BEAN MEAL OILS Trading Hours 09h00 12h00 South

More information

Specifications of Futures and Options Contracts

Specifications of Futures and Options Contracts Specifications of Futures and Options Contracts Overview There have been organized commodity exchanges in the United States since the Chicago Board of Trade (CBOT) was established in 1848. Other agricultural

More information

Chapter Five: Risk Management and Commodity Markets

Chapter Five: Risk Management and Commodity Markets Chapter Five: Risk Management and Commodity Markets All business firms face risk; agricultural businesses more than most. Temperature and precipitation are largely beyond anyone s control, yet these factors

More information

Futures Contracts. Futures. Forward Contracts. Futures Contracts. Delivery or final cash settlement usually takes place

Futures Contracts. Futures. Forward Contracts. Futures Contracts. Delivery or final cash settlement usually takes place Futures 1 Futures Contracts Forward Contracts Futures Contracts Forwards Private contract between 2 parties Not standardized Usually one specified contract date Settled at end of contract Delivery or final

More information

Futures Market Failure? Philip Garcia, Scott H. Irwin, and Aaron Smith ONLINE APPENDIX

Futures Market Failure? Philip Garcia, Scott H. Irwin, and Aaron Smith ONLINE APPENDIX Futures Market Failure? Philip Garcia, Scott H. Irwin, and Aaron Smith ONLINE APPENDIX Appendix 1. Data Used in Regression Analysis We use data from 1986-2013 for the CBOT contracts and 1990-2013 for the

More information

Mechanics of the Futures Market. Andrew Wilkinson

Mechanics of the Futures Market. Andrew Wilkinson Mechanics of the Futures Market Andrew Wilkinson Risk Disclosure Options and Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading

More information

Introduction to Options. Commodity & Ingredient Hedging, LLC www.cihedging.com 312-596-7755

Introduction to Options. Commodity & Ingredient Hedging, LLC www.cihedging.com 312-596-7755 Introduction to Options Commodity & Ingredient Hedging, LLC www.cihedging.com 312-596-7755 Options on Futures: Price Protection & Opportunity Copyright 2009 Commodity & Ingredient Hedging, LLC 2 Option

More information

Section III Advanced Pricing Tools

Section III Advanced Pricing Tools Section III Learning objectives The appeal of options Puts vs. calls Understanding premiums Recognizing if an option is in the money, at the money or out of the money Key terms Call option: The right,

More information

Commodity Futures and Options

Commodity Futures and Options Understanding Commodity Futures and Options for Producers of Livestock and Livestock Products CIS 1100 The Authors Larry D. Makus, C. Wilson Gray and Neil R. Rimbey* Introduction Risk associated with an

More information

Merchandising and Inventory Management of Commodities: Carrying Charges and Basis

Merchandising and Inventory Management of Commodities: Carrying Charges and Basis Merchandising and Inventory Management of Commodities: Carrying Charges and Basis Raleigh B. Wilson Several months ago when I was asked to prepare a program related to the cash activity of the grain industry,

More information

Grain and Oilseed Futures and Options

Grain and Oilseed Futures and Options commodity products Grain and Oilseed Futures and Options The global benchmark products you already trade. Now with the power of CME Group. Overview Grains and Oilseeds are renewable resources with continuously

More information

Milk Hedging Strategies Utilizing Futures & Options

Milk Hedging Strategies Utilizing Futures & Options Milk Hedging Strategies Utilizing Futures & Options A Basic Understanding of hedging and forward pricing scenarios Utilizing both futures & options traded at the Chicago Mercantile Exchange focusing on

More information

How futures markets work. Convergence between cash and futures

How futures markets work. Convergence between cash and futures How futures markets work Convergence between cash and futures Futures markets Futures markets have existed over 150 years as a means for managing price risk Futures contracts are purchase and sales agreements

More information

KCBOT: The Kansas City Board of Trade was formally chartered in 1876 and trades hard red winter

KCBOT: The Kansas City Board of Trade was formally chartered in 1876 and trades hard red winter Section I Introduction to Futures and Options Markets Learning objectives To know major agricultural futures exchanges To see the types of commodities traded To understand common characteristics of futures

More information

RE: Self-Certification of Hard Red Spring Wheat Calendar Spread Options Pursuant to CFTC Regulation 40.2(a)

RE: Self-Certification of Hard Red Spring Wheat Calendar Spread Options Pursuant to CFTC Regulation 40.2(a) Via Portal Submission November 18, 2014 MGEX Submission No. 14-27 Mr. Christopher J. Kirkpatrick Secretary of the Commission Commodity Futures Trading Commission Three Lafayette Centre 1155 21 st Street

More information

US EXCHANGE TRADING HOURS (All times are Chicago Time)

US EXCHANGE TRADING HOURS (All times are Chicago Time) US EXCHANGE TRADING HOURS (All times are Chicago Time) CME GROUP INC. CBOT (www.cmegroup.com) Open Outcry -Options Only GLOBEX Agriculturals (halts 7:45am-8:30am during the wk) Corn 8:30am to 1:15pm Sun-Fri

More information

Hedging Spot Corn: An Examination of the Minneapolis Grain Exchange s Cash Settled Corn Contract. by Dwight R. Sanders and Tracy D.

Hedging Spot Corn: An Examination of the Minneapolis Grain Exchange s Cash Settled Corn Contract. by Dwight R. Sanders and Tracy D. Hedging Spot Corn: An Examination of the Minneapolis Grain Exchange s Cash Settled Corn Contract by Dwight R. Sanders and Tracy D. Greer Suggested citation format: Sanders, D. R., and T. D. Greer. 2002.

More information

CBOT Precious Metals AN INTRODUCTION TO TRADING CBOT ELECTRONIC GOLD AND SILVER

CBOT Precious Metals AN INTRODUCTION TO TRADING CBOT ELECTRONIC GOLD AND SILVER CBOT Precious Metals AN INTRODUCTION TO TRADING CBOT ELECTRONIC GOLD AND SILVER Introduction The Chicago Board of Trade offers electronic trading on two of the world s most actively traded precious metals

More information

THE UNDAMENTALS AND ECHNIQUES RADING OMMODITY PREADS. c s

THE UNDAMENTALS AND ECHNIQUES RADING OMMODITY PREADS. c s c s THE UNDAMENTALS AND ECHNIQUES OF RADING OMMODITY PREADS The purpose of this booklet is to give you a better understanding of various aspects of spread trading in the futures market. Center for Futures

More information

Hedging: To buy or sell a futures contract on a commodity exchange as a temporary substitute for an intended later transaction in the cash market.

Hedging: To buy or sell a futures contract on a commodity exchange as a temporary substitute for an intended later transaction in the cash market. Section I Learning objectives Register for Commodity Challenge and join an open game Understanding your challenge Ground rules for trading in Commodity Challenge Illustrate a simple hedge with futures

More information

Basic Terminology For Understanding Grain Options, G85-768-A

Basic Terminology For Understanding Grain Options, G85-768-A G85-768-A Basic Terminology For Understanding Grain Options This publication, the first of six NebGuides on agricultural grain options, defines many of the terms commonly used in futures trading. Lynn

More information

Introduction to Futures Markets

Introduction to Futures Markets Agricultural Commodity Marketing: Futures, Options, Insurance Introduction to Futures Markets By: Dillon M. Feuz Utah State University Funding and Support Provided by: Fact Sheets Definition of Marketing

More information

Grain Marketing 101. University of Maryland Extension

Grain Marketing 101. University of Maryland Extension Grain Marketing 101 Jenny Rhodes Shannon Dill John Hall Extension Educators, Agriculture & Natural Resources Marketing terminology CBOT futures Basis Contracts Forward Contract Hedge to Arrive Basis Contract

More information

Commodity Price Outlook & Risks

Commodity Price Outlook & Risks Commodity Outlook & Risks Research Department, Commodities Team January, 2 www.imf.org/commodities commodities@imf.org This monthly report presents a price outlook and risk assessment for selected commodities

More information

CROP REVENUE COVERAGE INSURANCE PROVIDES ADDITIONAL RISK MANAGEMENT WHEAT ALTERNATIVES 1

CROP REVENUE COVERAGE INSURANCE PROVIDES ADDITIONAL RISK MANAGEMENT WHEAT ALTERNATIVES 1 Presented at the 1997 Missouri Commercial Agriculture Crop Institute CROP REVENUE COVERAGE INSURANCE PROVIDES ADDITIONAL RISK MANAGEMENT WHEAT ALTERNATIVES 1 Presented by: Art Barnaby Managing Risk With

More information

Commodity Futures and Options

Commodity Futures and Options Understanding CIS 1089 Commodity Futures and Options Larry D. Makus and Paul E. Patterson for Grain Marketing The Authors: L.D. Makus Professor, Department of Agricultural Economics and Rural Sociology,

More information

Yield Protection Crop Insurance will have the same Yield Coverage as Revenue Protection, but RP is Expected to be the Preferred Choice (Updated) 1

Yield Protection Crop Insurance will have the same Yield Coverage as Revenue Protection, but RP is Expected to be the Preferred Choice (Updated) 1 Disclaimer: This web page is designed to aid farmers with their marketing and risk management decisions. The risk of loss in trading futures, options, forward contracts, and hedge-to-arrive can be substantial

More information

Futures Contract Introduction

Futures Contract Introduction Futures Contract Introduction 1 The first futures exchange market was the Dojima Rice exchange in Japan in the 1730s, to meet the needs of samurai who being paid in rice and after a series of bad harvests

More information

Contract Specifications: ICE Brent Crude Futures and Options Contract

Contract Specifications: ICE Brent Crude Futures and Options Contract Contract Specifications: ICE Brent Crude Futures and Options Contract ICE Brent Crude Futures Contract: Description The ICE Brent Crude Futures Contract is a deliverable contract based on EFP delivery

More information

Principles of Hedging with Futures

Principles of Hedging with Futures MARKETING & UTILIZATION Cooperative Extension Service Purdue University West Lafayette, IN 47907 NCH-47 Principles of Hedging with Futures Chris Hurt, Purdue University Robert N. Wisner, Iowa State University

More information

Advance Trading Inc Merchandising Seminar. The Warehouse Industry

Advance Trading Inc Merchandising Seminar. The Warehouse Industry Advance Trading Inc Merchandising Seminar The Warehouse Industry How does the marketplace assure the consumer an adequate supply of grain all year? Consumption January-December October Production How does

More information

Contingent Claims: A stock option that is a derivative security whose value is contingent on the price of the stock.

Contingent Claims: A stock option that is a derivative security whose value is contingent on the price of the stock. Futures and Options Note 1 Basic Definitions: Derivative Security: A security whose value depends on the worth of other basic underlying variables. E.G. Futures, Options, Forward Contracts, Swaps. A derivative

More information

HEDGING IN THEORY AND PRACTICE

HEDGING IN THEORY AND PRACTICE HEDGING IN THEORY AND PRACTICE Ann Berg Senior Commodity Markets Development Expert USAID/FINREP-ІІ Kyiv, 2013 July 11 Maize contract (CME) 320 310 307.58 $ 11 April 308.07 $ 13 June 300 291.44 $ 1 March

More information

Trading Futures An educational source for understanding technical and fundamental commodity price action

Trading Futures An educational source for understanding technical and fundamental commodity price action Trading Futures An educational source for understanding technical and fundamental commodity price action The World Trades Here Table of Contents I. Introduction of Supply & Demand...1 II. Futures Contracts...1

More information

2010 Risk and Profit Conference Breakout Session Presenters. 9. Marketing Grain Using a Storage Hedge

2010 Risk and Profit Conference Breakout Session Presenters. 9. Marketing Grain Using a Storage Hedge Orlen Grunewald 2010 Risk and Profit Conference Breakout Session Presenters 9. Marketing Grain Using a Storage Hedge Orlen Grunewald is a professor in the Department of Agricultural

More information

AGRICULTURE UNDERSTANDING BASIS

AGRICULTURE UNDERSTANDING BASIS AGRICULTURE UNDERSTANDING BASIS General ContentsInformation Series Understanding Basis..................................... 2 Keeping History........................................ 6 Putting Basis to

More information

Understanding New Generation Grain Contracts November, 2005

Understanding New Generation Grain Contracts November, 2005 Understanding New Generation Grain Contracts November, 2005 Developed by: Steven D. Johnson, Ph.D. Farm & Ag Business Management Field Specialist Introduction Grain marketing and related cash and futures

More information

What is Grain Merchandising, Hedging and Basis Trading?

What is Grain Merchandising, Hedging and Basis Trading? Grain Merchandising What is Grain Merchandising, Hedging and Basis Trading? Grain merchandising describes the process of buying and selling grain. Agribusiness firms that merchandise grain include grain

More information

July 2010. Chart 1: World Edible Oil Production

July 2010. Chart 1: World Edible Oil Production Agricultural Products An Overview of the Edible Oil Markets: Crude Palm Oil vs Soybean Oil July 2010 Edible vegetable oils are some of the most crucial cooking ingredients in the world. In addition, edible

More information

Trade At Settlement (TAS)

Trade At Settlement (TAS) Trade At Settlement (TAS) Frequently Asked Questions April 2015 This material may not be reproduced or redistributed in whole or in part without the express, prior written consent of Intercontinental Exchange,

More information

Commodity Futures Trading Commission Proposes Position Limits for Commodity Derivatives

Commodity Futures Trading Commission Proposes Position Limits for Commodity Derivatives To Our Clients and Friends Memorandum friedfrank.com Commodity Futures Trading Commission Proposes Position Limits for Commodity Derivatives Summary The Commodity Futures Trading Commission (the Commission

More information

Staff Report on Cotton Futures and Option Market Activity During the Week of March 3, 2008

Staff Report on Cotton Futures and Option Market Activity During the Week of March 3, 2008 Staff Report on Cotton Futures and Option Market Activity During the Week of March 3, 2008 Commodity Futures Trading Commission 1155 21 st Street, NW Washington, DC 20581 January 4, 2010 Table of Contents

More information

CBOT Agricultural Markets. An Introduction to Trading CBOT Agricultural Futures and Options

CBOT Agricultural Markets. An Introduction to Trading CBOT Agricultural Futures and Options CBOT Agricultural Markets An Introduction to Trading CBOT Agricultural Futures and Options Table of Contents Introduction..................................................................... 3 Chapter

More information

WHEAT RANDFONTEIN + PAARL REF.POINTS

WHEAT RANDFONTEIN + PAARL REF.POINTS SPECIFICATIONS - FUTURES FUTURES 10 ton & Trading system code WMAZ 100 ton WNCI YMAZ 100 ton YNCI WOPT / YOPT WEAT / CAPE SUNS SOYA SORG GM1 SGBT GH1 Trading Hours 09:00 to 12:00 09:00 to 12:00 09:00 to

More information

The Futures Markets Canadian Securities Institute 1

The Futures Markets Canadian Securities Institute 1 The Futures Markets Canadian Securities Institute 1 Introduction This chapter provides an introduction to futures markets where exchange-traded, forward-based derivatives are traded. Forward-based derivatives

More information

Risk Disclosure Statement for CFDs on Securities, Indices and Futures

Risk Disclosure Statement for CFDs on Securities, Indices and Futures Risk Disclosure on Securities, Indices and Futures RISK DISCLOSURE STATEMENT FOR CFDS ON SECURITIES, INDICES AND FUTURES This disclosure statement discusses the characteristics and risks of contracts for

More information

Bid - An expression indicating a desire to buy a commodity at a given price, opposite of offer.

Bid - An expression indicating a desire to buy a commodity at a given price, opposite of offer. Actuals - An actual physical commodity someone is buying or selling, e.g., soybeans, corn, gold, silver, Treasury bonds, etc. Also referred to as actuals. Analogous Years Analysis - An analytical methodology

More information

Section III Advanced Pricing Tools. Chapter 14: Buying call options to establish a maximum price

Section III Advanced Pricing Tools. Chapter 14: Buying call options to establish a maximum price Section III Chapter 14: Buying call options to establish a maximum price Learning objectives Hedging with options Buying call options to establish a maximum price Delta and the hedge ratio Key terms Delta:

More information

Hedging strategies aim to reduce price risk

Hedging strategies aim to reduce price risk April 2014 INSIGHTS Hedging strategies aim to reduce price risk AgriThought AgriBank provides financial solutions to meet the needs of production agriculture in America s heartland. We feature our research

More information

Hedging With Options 101

Hedging With Options 101 Hedging With Options 101 An online tutorial by Christopher B. Swift Definition of a Futures Contract A futures contract is an agreement between two people, one agrees to make delivery (seller) and one

More information

Hedging Foreign Exchange Rate Risk with CME FX Futures Canadian Dollar vs. U.S. Dollar

Hedging Foreign Exchange Rate Risk with CME FX Futures Canadian Dollar vs. U.S. Dollar Hedging Foreign Exchange Rate Risk with CME FX Futures Canadian Dollar vs. U.S. Dollar CME FX futures provide agricultural producers with the liquid, efficient tools to hedge against exchange rate risk

More information

COMMODITIES. CBOT Soybeans vs. DCE Soybean Meal and Soybean Oil Crush Spread

COMMODITIES. CBOT Soybeans vs. DCE Soybean Meal and Soybean Oil Crush Spread COMMODITIES CBOT vs. DCE and Soybean Oil Spread JULY 2015 CBOT SOYBEANS VS. DCE SOYBEAN MEAL AND SOYBEAN OIL CRUSH SPREAD A key component in the soybean market is what is known as the crush spread. are

More information

CBOT. Trading In Futures An Introduction

CBOT. Trading In Futures An Introduction CBOT Trading In Futures An Introduction Contents Introduction... 1 What is a Futures Contract?... 1 Offset... 2 Delivery... 2 Profit Opportunities with Futures... 2 Long or Short... 2 Why Trade a Futures

More information

Common Crop Insurance Policy (CCIP) DR. G. A. ART BARNABY, JR. Kansas State University 4B Agricultural Consultants

Common Crop Insurance Policy (CCIP) DR. G. A. ART BARNABY, JR. Kansas State University 4B Agricultural Consultants Common Crop Insurance Policy (CCIP) DR. G. A. ART BARNABY, JR. Kansas State University 4B Agricultural Consultants Phone: 785-532-1515 EMAIL: barnaby@ksu.edu Check out our WEB page at http://www.agmanager.info

More information

Definitions of Marketing Terms

Definitions of Marketing Terms E-472 RM2-32.0 11-08 Risk Management Definitions of Marketing Terms Dean McCorkle and Kevin Dhuyvetter* Cash Market Cash marketing basis the difference between a cash price and a futures price of a particular

More information

FUTURES SPREADS PRODUCT GUIDE

FUTURES SPREADS PRODUCT GUIDE FUTURES SPREADS PRODUCT GUIDE 1 PRODUCT INTRODUCTION Saxo Bank offers clients online trading in Futures Spreads from the main Exchange around the world starting with Globex and rolling-out gradually to

More information

ICE Middle East Sour Crude Oil Futures Contract: FAQ

ICE Middle East Sour Crude Oil Futures Contract: FAQ ICE Middle East Sour Crude Oil Futures Contract: FAQ 1. Why are we launching a sour crude contract? To provide a hedging tool to accommodate risk management needs in the global market for sour crude oil.

More information

MERCHANDISING AND INVENTORY MANAGEMENT OF COMMODITIES: CARRYING CHARGES AND BASIS

MERCHANDISING AND INVENTORY MANAGEMENT OF COMMODITIES: CARRYING CHARGES AND BASIS MERCHANDISING AND INVENTORY MANAGEMENT OF COMMODITIES: CARRYING CHARGES AND BASIS by Raleigh B. Wilson Continental Grain Company Director, Chicago Board of Trade JJEVERAL months ago when I was asked to

More information

ASX 3 and 10 Year Treasury Bonds Futures and Options

ASX 3 and 10 Year Treasury Bonds Futures and Options ASX 3 and 10 Year Treasury Bonds Futures and Options Interest Rate Markets Fact Sheet ASX s 3 and 10 Year Treasury Bond Futures and Options are the benchmark derivative products for investors trading and

More information

U.S. Dollar Index Contracts

U.S. Dollar Index Contracts U.S. Dollar Index Contracts FAQ June 2015 What is the Dollar Index? The U.S. Dollar Index is a geometrically-averaged calculation of six currencies weighted against the U.S. dollar. The U.S. Dollar Index

More information

ICE BARLEY FUTURES & OPTIONS. www.theice.com. April 2013. IntercontinentalExchange ICE Futures Canada ICE Clear Canada

ICE BARLEY FUTURES & OPTIONS. www.theice.com. April 2013. IntercontinentalExchange ICE Futures Canada ICE Clear Canada ICE BARLEY FUTURES & OPTIONS April 2013 IntercontinentalExchange ICE Futures Canada ICE Clear Canada www.theice.com Page 2 of 5 ICE Futures Canada is pleased to introduce new Barley futures and options

More information

We have seen in the How

We have seen in the How : Examples Using Hedging, Forward Contracting, Crop Insurance, and Revenue Insurance To what extent can hedging, forward contracting, and crop and revenue insurance reduce uncertainty within the year (intrayear)

More information

TRADING FUTURES ON THE SAXOTRADER PLATFORM

TRADING FUTURES ON THE SAXOTRADER PLATFORM TRADING FUTURES ON THE SAXOTRADER PLATFORM Saxo Capital Markets Tel: +65 6303 7788 Web Site: www.saxomarkets.com.sg 1 TRADING FUTURES ON THE SAXOTRADER PLATFORM OPEN DEMO OPEN LIVE WORLDWIDE INVESTMENT

More information

Bond Spread Futures - A Guide to the New Contract Month

Bond Spread Futures - A Guide to the New Contract Month SFE BULLETIN www.sfe.com.au 30 Grosvenor Street Sydney NSW 2000 Australia Telephone 61 2 9256 0555 Facsimile 61 2 9256 0666 PO Box N680 Grosvenor Place NSW 1220 Australia SFE Bulletin No: 26/04 From: SFE

More information

Commodity products. Self-Study Guide to Hedging with Grain and Oilseed Futures and Options

Commodity products. Self-Study Guide to Hedging with Grain and Oilseed Futures and Options Commodity products Self-Study Guide to Hedging with Grain and Oilseed Futures and Options In a world of increasing volatility, CME Group is where the world comes to manage risk across all major asset classes

More information

The original purpose of futures contracts was to provide a facility for people to hedge their price risk.

The original purpose of futures contracts was to provide a facility for people to hedge their price risk. Futures Bas sicss Propex Derivatives Pty Ltd 2012 The information in this document and related documents and communication is intended for educational purposes only and does not constitute advice. Redistribution

More information

Slfl 01(0. Carley Garner. An Introduction to the World's Fastest Growing Market, Second Edition

Slfl 01(0. Carley Garner. An Introduction to the World's Fastest Growing Market, Second Edition Slfl 01(0 An Introduction to the World's Fastest Growing Market, Second Edition Carley Garner Contents Introduction: The Boom and Bust Cycles of Commodities...and Now Brokerage Firms 1 What Has Changed?

More information

CANTOR EXCHANGE FOREIGN EXCHANGE RATE SPOT INDEX DAILY FUTURES AND BINARY FLEX OPTION CONTRACT RULES

CANTOR EXCHANGE FOREIGN EXCHANGE RATE SPOT INDEX DAILY FUTURES AND BINARY FLEX OPTION CONTRACT RULES CANTOR EXCHANGE FOREIGN EXCHANGE RATE SPOT INDEX DAILY FUTURES AND BINARY FLEX OPTION CONTRACT RULES I-1. Scope and Underlying (a) This Chapter governs transactions involving all Contracts derived from

More information

Understanding and Using the Basis by John C. McKissick and George A. Shumaker Extension Agricultural Economists-Marketing

Understanding and Using the Basis by John C. McKissick and George A. Shumaker Extension Agricultural Economists-Marketing Understanding and Using the Basis by John C. McKissick and George A. Shumaker Extension Agricultural Economists-Marketing Understanding the concept of basis is a key element in developing a sound marketing

More information

Currency Derivatives Guide

Currency Derivatives Guide Currency Derivatives Guide What are Futures? In finance, a futures contract (futures) is a standardised contract between two parties to buy or sell a specified asset of standardised quantity and quality

More information

Chapter 1 - Introduction

Chapter 1 - Introduction Chapter 1 - Introduction Derivative securities Futures contracts Forward contracts Futures and forward markets Comparison of futures and forward contracts Options contracts Options markets Comparison of

More information

how to read the futures & options statements.

how to read the futures & options statements. how to read the futures & options statements. 2 HOW TO READ FUTURES & OPTIONS TRADING STATEMENTS This information has been prepared to help you understand your Futures and Options Trading Statement (Tax

More information

How To Trade Futures

How To Trade Futures CME GROUP EDUCATION A Trader s Guide to Futures Thought Leadership with a Global Perspective How the world advances cmegroup.com/education TABLE OF CONTENTS SECTION 1 What Are Futures? 4 SECTION 2 Who

More information

Frequent Asked Questions

Frequent Asked Questions Frequent Asked Questions 1. What are RMB currency futures? What will be the underlying currency pair? RMB currency futures are futures contracts based on the exchange rates between RMB and other currencies.

More information

FX Options NASDAQ OMX

FX Options NASDAQ OMX FX Options OPTIONS DISCLOSURE For the sake of simplicity, the examples that follow do not take into consideration commissions and other transaction fees, tax considerations, or margin requirements, which

More information

Agricultural Commodity Marketing: Futures, Options, Insurance

Agricultural Commodity Marketing: Futures, Options, Insurance Agricultural Commodity Marketing: Futures, Options, Insurance By: Dillon M. Feuz Utah State University Funding and Support Provided by: On-Line Workshop Outline A series of 12 lectures with slides Accompanying

More information

COMMODITY PRODUCTS. 2008 Moore Research Report. Seasonals Charts Strategies PORK

COMMODITY PRODUCTS. 2008 Moore Research Report. Seasonals Charts Strategies PORK COMMODITY PRODUCTS 2008 Moore Research Report Seasonals Charts Strategies PORK Welcome to the 2008 Moore Historical PORK Report This comprehensive report provides historical daily charts, cash and basis

More information

CME Group 2012 Commodities Trading Challenge. Competition Rules and Procedures

CME Group 2012 Commodities Trading Challenge. Competition Rules and Procedures Competition Rules and Procedures CME Group with assistance from CQG and the University of Houston, is sponsoring a commodities trading competition among colleges and universities. Students will compete

More information

The basic concepts of grain price options are

The basic concepts of grain price options are Grain Price Options Basics File A2-66 December 2009 www.extension.iastate.edu/agdm The basic concepts of grain price options are discussed below. Methods of using grain price options to market grain are

More information

Grain Futures Markets & National Cash Indices Review & Observations thru July 27, 2012 PHI Market Analysis Manager Virg Robinson

Grain Futures Markets & National Cash Indices Review & Observations thru July 27, 2012 PHI Market Analysis Manager Virg Robinson Grain Futures Markets & National Cash Indices Review & Observations thru July 27, 2012 PHI Market Analysis Manager Virg Robinson S&P 500 FUTURES NEAR BULLISH BREAKOUT The S&P 500 futures monthly continuation

More information

Grain Marketing Terms

Grain Marketing Terms Grain Marketing Terms File A2-05 January 2010 www.extension.iastate.edu/agdm Actuals - The physical commodities that are being traded. Arbitrage - The simultaneous purchase of commodities in one market

More information

RISK DISCLOSURE STATEMENT FOR SECURITY FUTURES CONTRACTS

RISK DISCLOSURE STATEMENT FOR SECURITY FUTURES CONTRACTS RISK DISCLOSURE STATEMENT FOR SECURITY FUTURES CONTRACTS This disclosure statement discusses the characteristics and risks of standardized security futures contracts traded on regulated U.S. exchanges.

More information

Futures and Options Trading in Milk and Dairy Products

Futures and Options Trading in Milk and Dairy Products A3732 Futures and Options Trading in Milk and Dairy Products A Guidebook for Dairy Producers Edward V. Jesse and Robert A. Cropp Contents Introduction. 1 Part I: Dairy futures contracts What is a futures

More information

Understanding and Using Basis - Grains

Understanding and Using Basis - Grains Understanding and Using Basis - Grains By: E. Dean Baldwin Reviewers: John Ferris and David Holder Edited by Duane Griffith and Stephen Koontz 1 Basis is defined as the amount in cents per bushel a specified

More information

MetaTrader 4 for Android TM Guide

MetaTrader 4 for Android TM Guide MetaTrader 4 for Android TM Guide Android is a trademark of Google, Inc. Logging in Upon downloading and installing MetaTrader 4 for Android TM from Google Play, you will see the Metatrader 4 icon appear

More information

Forward and Futures Markets. Class Objectives. Class Objectives

Forward and Futures Markets. Class Objectives. Class Objectives Forward and Futures Markets Peter Ritchken Kenneth Walter Haber Professor of Finance Case Western Reserve University Cleveland, Ohio, 44106 Peter Ritchken Forwards and Futures 1 Class Objectives Buying

More information

2013 World Grain Outlook

2013 World Grain Outlook 2013 World Grain Outlook Presented by: John Roach February 18, 2013 Disclaimer: Futures/options trading involves substantial risk of loss and trading may not be suitable for all investors. You should fully

More information

Chapter 10 Corn Futures

Chapter 10 Corn Futures Chapter 10 Corn Futures 10100. SCOPE OF CHAPTER This chapter is limited in application to Corn futures. The procedures for trading, clearing, inspection, delivery and settlement of Corn futures not specifically

More information

BOND FUTURES. 1. Terminology... 2 2. Application... 11. FINANCE TRAINER International Bond Futures / Page 1 of 12

BOND FUTURES. 1. Terminology... 2 2. Application... 11. FINANCE TRAINER International Bond Futures / Page 1 of 12 BOND FUTURES 1. Terminology... 2 2. Application... 11 FINANCE TRAINER International Bond Futures / Page 1 of 12 1. Terminology A future is a contract to either sell or buy a certain underlying on a specified

More information

AGRICULTURAL COMMODITY What you need to know

AGRICULTURAL COMMODITY What you need to know AGRICULTURAL COMMODITY What you need to know Product Disclosure Statement Issue date: 12 March 2014 Issued by: Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 You should read all sections

More information

COMMODITY SPREAD TRADING

COMMODITY SPREAD TRADING COMMODITY SPREAD TRADING discretionary commodity trading in different and profitable way Romana Křížová CEO, TradeandFinance.eu, s.r.o. 1 What is Spread? Often used term Used in different contexts represents

More information

COMMODITY FUTURES TRADING COMMISSION. 17 CFR Parts 1, 15, 17, 19, 32, 37, 38, 140, and 150

COMMODITY FUTURES TRADING COMMISSION. 17 CFR Parts 1, 15, 17, 19, 32, 37, 38, 140, and 150 6351-01-P COMMODITY FUTURES TRADING COMMISSION 17 CFR Parts 1, 15, 17, 19, 32, 37, 38, 140, and 150 RIN 3038 AD99; 3038-AD82 Position Limits for Derivatives and Aggregation of Positions AGENCY: Commodity

More information

5. Foreign Currency Futures

5. Foreign Currency Futures 5. Foreign Currency Futures Futures contracts are designed to minimize the problems arising from default risk and to facilitate liquidity in secondary dealing. In the United States, the most important

More information

Group Risk Income Protection

Group Risk Income Protection Group Risk Income Protection James B. Johnson and John Hewlett* Objective Analysis for Informed Agricultural Marketing Policy Paper No. 13 July 2006 Decision Making * University of Wyoming, Extension Educator

More information

FROZEN CONCENTRATED ORANGE JUICE

FROZEN CONCENTRATED ORANGE JUICE FROZEN CONCENTRATED ORANGE JUICE IntercontinentalExchange (ICE ) became the center of global trading in soft commodities with its acquisition o f t h e N ew Yo r k B o a rd o f Tra d e (NYBOT) in 2007.

More information