Paving the way to a record month in the Kansas City Board of Trade wheat options contract was a new single-day record of 5,410 contracts set on Wednesday, May 29, breaking the previous single day record of 5,261 contracts, which was set on June 26, 2001.
A large part of the increase in wheat options trading has been a result of people 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.
Also on May 29, some people were liquidating their July wheat options contracts and also were rolling the July contracts into September wheat options contracts in front of expiration on June 22. Wheat options open interest has grown 23.1 percent compared to the end of May 2001 and is posting a 35.4 percent increase when compared to the end of April of this year.
Year-to-date volume for wheat options is 41.5 percent ahead of last year at this time, and last year was another record-volume year for wheat options. The Kansas City Board of Trade, chartered in 1876, is the world's largest futures market for hard red winter wheat.
