KCBT Wheat Options Set New Annual Trading Volume Record, Open Interest Record

Trading volume in Kansas City Board of Trade wheat options has set a new annual record, the sixth year in a row that this has occurred. At the conclusion of Wednesday's trade, year-to-date volume in KCBT wheat options totaled 245,029 contracts, surpassing the previous annual record of 243,311 contracts established in 2001. Approximately five and a half months remain in 2002 to build on the new record. The 2001 record was initially set on November 20, 2001. This is the earliest point in the year that a new annual record has been set in recent history.

Throughout 2002, traders at the KCBT have been attributing volume gains to an increasing number of market participants utilizing KCBT wheat options for price protection, choosing to use options as a hedging tool as they become better educated about the increased viability of KCBT wheat options contracts.

Traders also have said that an increasing number of people have been looking at diversified strategies for risk management and utilizing wheat options as part of their risk management plan. In the past year, the KCBT wheat options pit has seen increased depth in the market, increased liquidity and tighter markets. These factors have led to a more efficient marketplace, particularly when added to a larger number of both local traders and brokers in the wheat options pit.

Additionally, the KCBT wheat options contract has set a new all-time open interest record. At the close of the market yesterday, open interest stood at 51,708 contracts. The previous record of 50,715 contracts was set on June 19, 2002. Options give a buyer the right, but not the obligation, to buy or sell a KCBT wheat futures contract at a specified price. KCBT wheat options have been trading since 1984. Open interest measures the number of open trading positions in a market.

For a 13-year wheat options volume history chart go to: http://www.kcbt.com/071802.htm and scroll to the bottom.