Copper Futures and Options Trading

High Grade Copper, one of the oldest commodity known to man, is a product with fortunes that can directly reflect the state of the world economy. It is the world's third most widely used metal, after iron and aluminum, and is primarily used in highly cyclical industries such as construction and industrial machinery manufacturing. Profitable extraction of copper depends on cost-efficient high-volume mining techniques, and supply is sensitive to the political situation particularly in those countries where copper mining is a government-controlled enterprise.

Copper was first worked about 7,000 years ago. Its softness, color, and presence in nature enabled it to be easily mined and fashioned into primitive utensils, tools, and weapons. Five thousand years ago, man learned to alloy copper with tin, producing bronze and giving rise to a new age, The Bronze Age.

Copper has been called by many Commodity trading fundamental analysts as the only commodity with a PhD. in economics because it's rising prices sometimes precede periods of economic growth. This has been attributed to copper's industrial uses in electrical and plumbing for new homes and other manufacturing uses.

Copper market participants across the board use COMEX Division high-grade copper futures and options to mitigate price risk, and the copper future and copper option contracts are used as investment vehicles by large and small future and option traders.

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Copper Futures Commodity Contract Specifications

Trading Specs

Futures: 25,000 pounds

Options: one COMEX Division high-grade copper futures contract

Trading Hours

Futures and Options: 8:10 A.M. to 2:00 P.M. for the open outcry session.

Trading Months

Futures: Trading is conducted for delivery during the current calendar month and the next 23 consecutive calendar months.

Options: Commodity Options are offered for trading in each of the following contract months: March, May, July, September, and December up to one year to expiration. Serial months are also listed so there are always three consecutive nearby months traded. Twenty-four-month copper options are listed when July and December become the 24^th month. The options are American-style and can be exercised at any time up to expiration.

Price Quotation

Futures and Options: cents per pound

Minimum Price Fluctuation

Futures and Options: Copper price changes are registered in multiples of five one hundredths of one cent ($0.0005, or $0.05) per pound, equal to $12.50 per contract. A fluctuation of $0.01 is equal to $250 per contract.

Maximum Daily Price Fluctuation

Futures: Initial price limit, based upon the preceding day's settlement price, is $0.20 per pound. Two minutes after the two most active months trade at the limit, trading in all months of futures and options will cease for a 15-minute period. Trading will also cease if either of the two active months is bid at the upper limit or offered at the lower limit for two minutes without trading.

Trading will not cease if the limit is reached during the final 20 minutes of a day's trading. If the limit is reached during the final half-hour of trading, trading will resume no later than 10 minutes before the normal closing time.

When trading resumes after a cessation of trading, the price limits will be expanded by increments of 100%.

Option: No price limit.

Last Trading Day

Futures: Terminates at the close of business of the third last business day of the maturing delivery month.

Options: Expire on the fourth last business day of the month prior to the delivery month of the underlying futures contract.

Exercise of Options

Until 3 P.M., New York time, on any business day for which the option is listed for trading. On expiration day, the buyer has until 4P.M., New York time, to exercise an option.

Option Strike Price Intervals

Options: $0.01 per pound apart for strike prices below $0.40. $0.02 per pound apart for strike prices between $0.40 and $1.20, and $0.05 apart for strike prices above $1.20.

Delivery

Copper may be delivered against the high-grade copper contract only from a warehouse in the United States licensed or designated by the Exchange. Delivery must be made upon a domestic basis; import duties or import taxes, if any, must be paid by the seller, and shall be made without any allowance for freight.

Delivery Period

The first delivery day is the first business day of the delivery month; the last delivery day is the last business day of the delivery month.

Margin Requirements

Margins are required for open futures and short options positions. The margin requirement for an options purchaser will never exceed the premium paid.

Trading Symbols

Futures: HG
Options: HX

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