The Long and Short of Futures Options: The Great Ag Explosion

Options Radio Show

The Long and Short of Futures Options: The Great Ag Explosion

Posted August 15th, 2011 by The Options Insider in Radio Show

The Long and Short of Futures Options: The Great Ag Explosion
Welcome to the premiere of The Long and Short of Futures Options. In this episode, www.TheOptionsInsider.com Founder Mark Longo dives into the explosive world of agricultural options, with a particular emphasis on corn options. Mark is joined by Tim Andriesen (MD, Ag Commodities and Alt. Investment Products, CME Group) and David Lehman (MD, Commodity Research and Product Development, CME Group) to examine the mysteries behind the corn option frenzy. In addition, Mark, David and Tim examine the growing interest in weekly corn options, the plans for the Corn VIX, and much more. They even take a few minutes to answer listener questions regarding agricultural options. The Long and Short of Futures Options: The Great Ag Explosion is required listening for all current agricultural options traders, as well those planning to enter this dynamic marketplace for the first time.

Segment Breakdown

WHAT TO WATCH: Breaking down the interesting and/or unusual activity at CME Group on the agricultural options side. Corn!!! - the hot product. Corn volatility is off the charts - well more than double historical averages. The increase in Chinese imports is contributing to corn volatility. The explosion in corn volatility is driving a resurgence in retail & institutional interest. Corn also has a deep and liquid options market compared to many other options products - with liquidity across a variety of months and strikes. Call skew vs. put skew - customers are flocking into corn right now to purchase upside protection. That is similar to the put frenzy in equity option markets right now

WHAT'S NEW: Weekly corn options are only ten weeks old but they are on fire. Surprisingly, most customers are buying premium in weekly ag options. That is a significant change from the premium selling frenzy witnessed in weekly equity options. We also explore CME Group's plans for the corn and soybean VIX licenses.

WHAT'S ON YOUR MIND: Listener calls are fielded by the expert CME panel. What is the limit on corn options? Are the rumors of equity option market makers flocking to corn pits true? What is the future schedule for The Long & Short of Futures Options?