No guarantees are being made to the content's accuracy or completeness. Corn has been called the other yellow gold because of its value around the globe throughout most of the history of man.
Corn is a member of the grass family of plants and is one of the native grains of the American continents. For thousands of years corn has been a staple of everyday life, serving as a source of food, energy and currency. Early Indians migrated from Eastern Asia through North America to what is now South America and used corn plants for everything from making clothes to making a primitive beer from its chewed kernels.
For thousands of years, maize crops have been cultivated by the Mayans and Incas to today's advanced hybrids resistant to pests and chemicals, corn remains firmly rooted at the heart of agriculture.
Corn is thought to be the second most cultivated plant throughout the history of man behind wheat. Here is the grain and oilseed brochure courtesy of the CME Group. As an exchange traded commodity and future contract, corn futures is one of the two originals and is also the most liquid of the grain future contracts. Cotton began trading in New York at about the same time that corn futures began trading in Chicago in the mid 's.
The original corn futures or forward contract was for bushels instead of the bushel contract of today. The Chicago Board of Trade is the premiere corn future trading exchange in the world today. The corn market's role in the production of ethanol has increased its demand because of the high prices for petroleum products. Corn, soybeans and wheat are often used to feed poultry and livestock and are sometimes substitutes for each other based on prices.
As an example, if corn prices are too high, livestock farmers may feed their animals feed wheat or some other grain. The same goes for soy meal and corn meal.
Poultry farmers will use which ever one gives them the most protein bang for the buck. Corn has many different uses and many different products are made from corn that many people are unaware of: These diverse applications for corn make the corn futures and corn options market that much more important to the corn industry.
Many savvy farmers use the corn futures and corn options markets to hedge their crops against adverse price movements. How many times a day does the average American consumer use a product derived from corn? You may fill your car up with ethanol blended fuel. That soda at lunch - sweetened with a corn sweetener.
Maybe you have a pillow or comforter made from corn fiber. And the pot roasts for dinner - most likely corn-fed beef. The grain future contracts have become more and more popular because of their relative liquidity and leverage. Regardless of market, producers around the world continue to explore value-added opportunities for corn. One of the most successful efforts has been the growth of the ethanol market. Ethanol production is being subsidized in the U. Corn future and ethanol future trading have become major future trading contracts.
Are you a corn hedger? If so, click here to learn more. A corn 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.
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 corn option to hedge your price risk in the physical corn market you may be a farmer or and end user of corn or you are speculating that corn prices will go higher in an attempt to make a profit.
A corn 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. 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. 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 December corn call option with 60 days left until expiration. Let's also assume that the corn 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. Please click here to see the most recent contract specifications and click here for the most recent trading hours. Size - 5, bushels. Last Trading Day - Seventh business day proceeding the last business day of the delivery month. Last Trading Day - Last Friday proceeding the first notice day of the corresponding futures contract by at least five business days. Expiration Day - Unexercised options expire at 10 a.
To see more about the grain futures visit soybean futures and wheat futures. The History of Corn and Corn Futures Trading Corn has been called the other yellow gold because of its value around the globe throughout most of the history of man.
Corn and Corn Futures and Options Uses How many times a day does the average American consumer use a product derived from corn?
Corn Options on Futures Contracts Explained A corn 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. What is the delta factor? Corn Futures Facts One bushel of corn weighs 56 pounds. One bushel of corn produces 2. To produce 1 pound of chicken requires 2 pounds of grain.
To produce 1 pound of pork requires 4 pounds of grain. To produce 1 pound of beef requires 8 pounds of grain. 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.More...