I understand equity options but don't get the math on this. Looking at orange juice Jan 1.15 calls- no bid, .10 ask. Futures at 1.15. If I buy 1 at .10, it will cost $1570. How is that figured??
An OJ tick is $7.50, so that would cost you $15.00 not $1500.00. I am looking at the options chain and I see the 115 call closing at 10.45.
It is going to cost you around 800. You definitely are going to have to pay up as the b/a is going to be wide.
The bid ask spread on most soft options is wider than the grains. I bot these calls earlier in the week at 950 against short futures @ 115.00 as I put on some synthetic puts. The quote from the floor was 900 - 1000. the 100 point spread was actually pretty good for an OJ call.
Wow, I am not too fam. with soft options other than sugar. I have been watching the cocoa b/a and it's pretty wide too.
Cocoa has a pretty nasty b/a spread. There are also few locals in the pit, and relatively low volume... so if you want to get filled, you can never split the spread. I've had to hit the bid/ask more than a few times, even with time to work. Sugar has a nice tight spread. Coffee's alright, too. I really can't wait until all of the serial options in the softs are available electronically.
I'll learn it the hard way. Long jan10 1.15 call at .10 (whatever that means, Interactive Brokers quote). It cost $1570. I got a little ahead of myself though, just speculation. Pretty reckless, but at least not shorting options. First ag trade for me.