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 Soybean Futures and Options Market Trading

 

Watch the Video>>How to Trade Soybean Futures and Options

 

 

 

 

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*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 Here Now! for actual 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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The information presented in this commodity futures and options site is not investment advice and is for informational purposes only. No guarantees are being made to its accuracy or completeness. This information can be considered a solicitation to enter into a derivatives trade. Investing in futures and options carries substantial risk of loss and is not suitable for some people. Past or simulated performance is not indicative to future results.