I know this explains a lot: http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/corn_contract_specifications.html However I see the handle in DEC on GLOBEX last 443'2 what exactly mean- DEC can trade 443, 443'2, 443'6 443'8 then 444 ? each tick (total 4 possible) 12.50 so .01 move in DEC corn is 50 bucks a contract ? question is if each tick is 1/4 of .01 why its quoted as '2 '6 8' then rounded again ?
You should see '2, '4 and '6 to denote fractions of a cent in the futures contract prices. You should not see '8. In options, which are traded in eighths, you'll see '1 to '7; again, you should not see '8 Futures example: 434'6 = $4.3475/bushel (dollars per bu). Some quote services display this as 434.75 (cents per bushel) Options example: 10'3 = $0.10375/bushel or 10.375 cts per bushel Min tick size in futures is one quarter of one cent/bu or $12.50 per contract. A one cent move is $50.00 Min tick size in options is one eigth of one cent/bu or $6.25 per contract. A one cent move is $50.00
Once upon a time, data transmission was very expensive and priced by the character. Plus there may have been space constraints on quote boards and old CRTs. Neither of those reasons exist anymore - I guess it's just tradition and inertia.
Exactamundo. You might see a zero ('0), but that just means a whole cent - 434 and 435 in your examples immediately above.
Is this a legacy thing? I mean, is this just kept around from pre-computerization days? If not, why would they be quoted this way?
Jack - I don't know why some quote services still use the '2 format. It's been a while since I visited a trading pit; maybe the monitors and big boards surrounding the pits still use that format, too. Another head-scratcher: Last week, same day, same account, same contract, I traded some corn options. The fills from Interactive Brokers came back as: 18 3/4 19.125 19.250 Their system is obviously capable of three decimal points, but why the heck did I get "18 3/4" (a fraction that requires only two decimal points)? I thought maybe the first set was traded in the pit, but I've got my platform set to "ECBOT" for all the grains and I paid e-contract commissions on all three sets.
1) The "2, 4 and 6" indicates eighths of a cent. Since the numerator is an even number and the denominator is eight, it reduces to a quarter-cent tick fluctuation. 2) The tick size in the ZC, ZS and ZW used to be one-eighth of a cent until ~1973 when it was raised to one-quarter. :eek: 3) The 1000-bushel, mini-grain contract might still trade with a one-eighth tick but traders avoid that for the quarters instead.
I was about to say corn traded 8ths when the price of corn was much lower. And yes the mini's still trade in 8ths.