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The History of Sugar and Sugar Futures Trading
For centuries, sugar has been a highly valued and widely traded commodity. Sugar
cane production originated, according to historians, some 2,500 years ago on the
Indian subcontinent. Today, sugar is a basic part of the production and
consumption of many foods worldwide which has made sugar futures very
necessary to hedge production and consumption price risk.
Sugar Futures and Options Quick Facts
112,000 pound contract size
one cent move equals $1,120
trades Mar., May, July, Oct.
Sugar futures symbol (SB)
Here is a brochure from the ICE for sugar futures and
The September 11 terrorist attack destroyed the CSCE that was located in the
World Trade Center in New York City. It was moved a nearby site and sugar
and sugar option trading were fully functional within within a few days after
its destruction. It is a testament to the viability and strength of the futures
markets. The Coffee, Sugar, and Cocoa Exchange merged with the (NYBOT) and again
with the (ICE) and is the premiere world market for the trading of
and cocoa futures and options, and since 1993. Three sugar futures contracts (world
raw, world refined, and domestic raw) are listed at the (ICE). In 1982, the CSCE
launched the nation's first exchange-traded option on a futures contract when it
introduced options on world sugar futures. Learn
A sugar 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 March
sugar .14 cent call option and pay a premium of $800.
This means that you bought the right but not the
obligation to buy 112,000 pounds of March sugar for .14 cents per
pound. 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 sugar option to hedge your price risk in the
physical sugar market (you may be a sugar cane farmer or and end
user of sugar) or you are speculating that sugar prices will go
higher in an attempt to make a profit.
A sugar put option gives the
purchaser the right but not the obligation to sell the underlying
futures contract for a specific time period and a specific price.
Let's say that you wanted to buy a March sugar .13 cent put option
and pay a premium of $1,400.
This means that you have the right but not the
obligation to sell 112,000 pounds of March sugar at .13 cents per
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 March sugar .14 cent 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 sugar futures
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
Let's assume that you bought a March sugar .14
cent call option with 60 days left until expiration. Let's also
assume that the sugar 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.
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 futures 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.
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.
Sugar Futures and Options
Futures Contract Symbol- (SB)
Contact Size- 112,000 pounds
Trading Months -March (H), May (K), July (N) and
Minimum Price Movement - 1/100 cent/lb, equivalent
to $11.20 per contract
Trading Hours- 2:30 am -2:00 pm Eastern Time
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