KCBT Wheat Options Volume Surpasses All Previous Single-Day Records

Trading volume in Kansas City Board of Trade wheat options on Wednesday set a new single-day record. Wednesday's official wheat options volume was 4,322 contracts, which broke the previous single-day record of 3,460 contracts set barely a year ago, on May 5, 2000.

Traders attributed the surge in volume to increasing competition in the trading pit. The increasing number both of brokers and local traders in the wheat options pit, each of whom has a different strategy, makes for an increasingly efficient market. This competition benefits end-users and customers by offering a risk management tool in addition to wheat futures.

Many people also were using the options market to protect their trading positions in front of the USDA crop production report, which will be released on Thursday.

"We are having another year of record growth in wheat options volume," said Bob Petersen, KCBT president. " The KCBT is posting a 57.7 percent increase over trading volume at this time last year and 2000 was the fourth consecutive record-breaking year for KCBT wheat options volume. We're pleased that our customers are finding wheat options to be an increasingly useful marketing tool."

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. The underlying futures contract for KCBT wheat options represents 5,000 bushels of hard red winter wheat.