Traders attributed the increase in open interest to several factors. The seasonal tendency for an increase in wheat options volume at the beginning of harvest is being confirmed again this year, traders said. Also, wheat futures prices are at or near contract low levels, creating nervousness in the market and inciting an increase in wheat option volume. On Thursday there was good volume by major commercial interests in the wheat options calls, with volume of 4,275 contracts very close to the all-time single-day volume record of 4,322 contracts, set on May 9 of this year.
In the past months there has been increased participation by funds and commercial market participants. The Kansas City market has been experiencing increased depth in the market, increased liquidity and tighter markets. As a result, more people are utilizing Kansas City wheat futures options for hard red winter wheat.
Open interest measures the number of open trading positions in a market. The underlying futures contract for KCBT wheat options represents 5,000 bushels of hard red winter wheat.
