At the conclusion of Monday's trade, year-to-date volume in KCBT wheat options totaled 222,104 contracts, surpassing the previous annual record of 218,052 contracts established in 2000. About a month and a half remains in 2001 to add to the new record.
Throughout 2001, traders at the KCBT have been noting increased participation by funds and commercial market participants in the wheat options contract. In turn, the Kansas City wheat options market has been experiencing increased depth in the market, increased liquidity and tighter markets. As a result, people are able to more efficiently roll contracts into new months or into new strike prices instead of letting their wheat option contracts expire.
Traders also point to a larger number of both local traders and brokers in the wheat options pit, which makes for an increasingly efficient market. This competition benefits end-users and customers by offering a risk management tool in addition to wheat futures.
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.
