Soybean Futures and Options
Market Trading
Learn the most effective strategies for buying and selling options
on futures contracts. Also learn producer and consumer hedging
strategies.
*The information contained within this webpage comes from sources
believed to be reliable. No guarantees are being made to the
content's accuracy or completeness.
The History of Soybeans and CBOT Soybean Futures Trading
Soybean future and soybean option contracts are traded on the
Chicago Board of Trade. Soybeans originated in China
and were first brought over by a Yankee Clipper in 1804 to be used as a balast
that was discarded upon arrival in the U.S. It wasn't until 1829 when they were
first were grown to be used to make soy sauce and later as a substitute for
coffee beans.
George Washington
Carver first tested soybeans to find out uses for them to diminish the dependence
on cotton as the single commodity of the Southern economy. He invented soybean based
varnishes, paints, inks, mayonnaise, salad dressings,
linoleum, plastic and even fuel. Henry Ford and Mr. Carver
partnered up and used soybeans to make plastic
window handles, gas pedals and even dent proof trunk
covers for many of the Fords built in the 1930's and
40's. The original diesel engine, invented by
Rudolph Diesel, actually ran off of peanut oil based
on Carver's research and today's diesel engines can
run almost entirely on soybean oil. Using soybeans as a fuel
product is just recently becoming investigated again
because the high petroleum prices have made it
economically feasible to use green fuels such as
ethanol made from corn and sugar and bio diesel fuels made
from soybean oil.
CBOT
Soybean Futures and Options Quick Facts
-
5000 bushel contract size
-
one cent move equals $50
-
trades Jan., Mar., May, July, Aug., Sep.,
Nov., Dec.
-
Soybean futures symbol (S)
Here is the grain and oilseed brochure courtesy of the CME
Group.
Grain/oilseed brochure
Are you a
soybean hedger? If so,
click here to learn more.
Soybean Options on Futures Contracts Explained
A soybean call option gives the purchaser the right
but not the obligation to purchase the underlying futures contract
for a specific time period and a specific price (strike price).
Let's say that you wanted to purchase a May soybean $10.50 call option
and pay a premium of $1,200.
This means that you bought the right but not the obligation to buy
5,000 bushels of May soybeans for $10.50 per bushel. Of course, very
few options are bought for the purpose of taking delivery but that
is one potential outcome. Chances are that you either bought the
soybean option to hedge your price risk in the physical coffee
market (you may be a soybean producer like a farmer or a soybean end
user) or maybe you are speculating that soybean prices will go higher in an attempt to make
a profit.
A soybean put option gives the purchaser the right
but not the obligation to sell the underlying soybean futures
contract for a specific time period and a specific price. Let's say
that you wanted to buy a May soybean $10.30 put option and pay a premium of
$1,300.
This means that you have the right but not the obligation to sell
42,000 gallosn of May soybeans at $10.30 per bushel.
What is the delta factor?
The delta factor of an option represents the estimated percentage of
change an option will receive based on the movements in the
underlying futures contract.
Let's assume the May soybean call option above has a 30% delta
factor. This means that if the underlying futures contract were to
rally by $1,000, then the call option would accrue by approximately
$300 or 30% of $1,000 in the May soybean futures contract.
What is theta?
Options are wasting assets which means that they lose value as time
passes. The theta of an option is the measure of time decay.
Let's assume that you bought a May soybean $10.50 call option with
60 days left until expiration. Let's also assume that the soybean
futures prices have moved very little over the last month and are
exactly the same price 30 days later. Your option will have lost 30
days worth of time and therefore will be worth less today that it
was when it had 60 days left until expiration.
What is vega?
Vega is a measure of the implied volatility of an option contract as
it relates to its underlying futures contract. For instance, if the
underlying future contract is extremely volatile then the implied
volatility of the options of that futures contract will be affected.
In a high implied volatility environment option premiums tend to
expand. Conversely, in a low implied volatility environment the
option premiums tend to decrease.
*Contract information changes from time to time. Please
click here to see the most recent
contract specifications and
click here for the most recent trading hours.
Soybean Future Contract Specifications
Soybean Futures
Contract
Size -
5,000 bushels
Tick Size -
$0.025/bu
Daily Price Limit -
$0.50/bu
Strike Price -
$0.25/bu
Contract Months -
Jan, Mar, May, Jul, Aug, Sep, Nov
Last Trading Day -
Seventh business day proceeding the last business
day of the delivery month.
Trading Hours -
(CME Globex) Sunday - Friday 7:00 pm -7:45 am CT (Open Outcry) Monday -Friday 8:30 a.m. - 1:15 p.m. Central Time
Futures
Ticker Symbol -
S
Soybean Options
Contract
Size -
One CBOT Soybean Futures
Tick Size -
1/8c/bu
Daily Price Limit -
$0.50/bu
Strike Price -
N/A
Contract Months -
Jan, Mar, May, Jul, Aug, Sep, Nov
Last Trading Day -
Last Friday proceeding the first notice day of the
corresponding soybean futures contract by at least
five business days
Expiration Day -
Unexercised options expire at 10 a.m. on the first
Saturday following the last trading day.
Trading Hours -
(CME Globex) Sunday - Friday 7:00 pm -7:45 am CT (Open Outcry) Monday -Friday 8:30 a.m. - 1:15 p.m. Central Time
Futures
Ticker Symbol -
CZ- call;-PZ- put
**Click
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soybean futures and options quotes, prices, expirations, charts .....
Soyoil Futures and Options Contract Specifications
Contract Size- 60,000 pounds
Tick Size- 1/100 of a cent (0.0001) per pound ($6
per contract)
Daily Price Limit- 2.5 cents per pound expandable
to 3.5 and then 5.5 cents per pound when the market closes limit bid
or limit offer.
Contract Months- January (F), March (H), May (K),
July (N), August (Q), September (U), October (V) and December (Z)
Last Trading Day- The business day prior to the
15th calendar day of the delivery month
Trading Hours- (CME Globex) Sunday-Friday 7:00
pm-7:45 am CT and Monday-Friday 8:30 am-1:15 pm CT
(Open Outcry) Monday -Friday 8:30 am-1:15pm CT
Futures Ticker Symbol- Globex (ZL) Open Outcry (BO)
Soymeal Futures and Options Contract Specifications
Contract Size- 100 short tons
Tick Size- 10 cents per short ton ($10 per
contract)
Daily Price Limit- $20 per short ton expandable to
$30 and then to $45 when the market closes at limit bid or limit
offer.
Contract Months- January (F), March (H), May (K),
July (N), August (Q), September (U), October (V) and December (Z)
Last Trading Day- The business day prior to the
15th calendar day o fthe contract month.
Trading Hours- (CME Globex) Sunday -Friday 7:00
pm-7:45 am CT and Monday -Friday 8:30 am -1:15 pm CT
(Open Outcry) Monday -Friday 8:30 am -1:15 pm CT
Futures Ticker Symbol- Globex (ZM) Open Outcry (SM)
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