It could have traded on a spread at a price more than the limit. attached is the deep ITM on corn. I don't see one more than the limit. I could be wrong so if I am apologies. But i do believe the options have the same price limit as the futures on the grains.
The "volume" here must be contracts traded over Globex, rather than in the pit. Look at the settlement value for the 130, versus the 120 and 140. If it was limited to a 30 increase for the day, it would've settled at 399 2/8th. The actual settlement price of 130 shows corn, synthetically, closed at 566... and that's where (I assume) it will try to open on Sunday. Actually I take that back, I assume corn's price limit on Sunday is 30 cents, meaning it can't get higher than 558... so it looks like the expectation is that it will be limit up again at the open on Sunday.
I'll have to look it up but i believe if a certain number of options trade limit up the limit is expanded to 45 cents in corn. This is part of the increase in margin requirements as the limits expand.
Okay, i don't understand why they are raising the margins? If it's volatility, then my understanding is that all grains have more volatility during summer/harvest periods, and so they should have margins that reflect seasonality? And what are the units of those margin numbers?
Why hurting? You couldn't buy but you could sell, as long as you are willing to take a hit, right? Alternatively, there are people with different economic incentives, such as me. I have to sell anyway for some other reasons... And btw, if you were short the grains, then a few days ago you had already made a killing when the grains came off the peak, while we suffered on the long side.
You can use the calendar spreads if you don't have access to swaps. The CZ10/CZ12 calendar was used all day as the indicator for future CZ10 movement. OTC swaps went home indicating 5.66 -5.68 cz0.
I think when they were referring to the grains being closed, they meant between 8:30am-10:30am Est at which point no you can not trade synthetics as the market is completely closed...and I still do not understand why that is so but whatever(maybe it is for the ancient floor traders haha). You can put on a synthetic which will be the strict equivalent of a future and therefore everything(greeks) will be canceled out other than the delta...essentially a futures contract. No, options do not have limits as they are a derivative of the futures...Granted the synthetic might have a limit for the day, I know they just implemented a limit for cotton so that it cannot trade higher than twice the daily limit, which it almost did yesterday before getting crushed. P.S. I didn't feel like reading through all the posts so I apologize if some of these have been answered.
Thats my point grg - grains used to be traded in the pit only not so long ago. For whatever reason there was a lot of resistance from pit traders to have the grains traded electronically and CBOT/CME agreed to shut down electronic trading before pit session - rumour said back then if traded 23hrs it would give off-floor traders an advantage - how I have no idea. Maybe if there is one of those dinasour grain pit traders reading this, would you please care to elucidate. Thank You For Your Time. Anywhere to closing of grains during that period makes them quite unattractive to hold long term wise as one has to time and liqudate around WASDE reports- exception is when I have big profit cushion like on wheat but 14days work evaporated in seconds. Its impossible in those situations for a directional futures trader to control risk unless one is willing to pay a high price in hedging options as said by Nazz. I believe in the long term for a directional futures trader and unless it provides any statistical edge, always hedging a futures positions with options ultimately leads to diminished or negative returns. You win futures then lose premium on options or you win option then lose on future position. Doing that to control risk ?
Maybe vertical spreads are the go for you,at least they cushion the impact of these big swings these days. 6 hours to go eek: leslloyd :