Wheat Futures and Options Trading

There are three main types of Wheat Futures with active, Commodity futures contracts traded on them: Soft Red Winter (Chicago Board of Trade), Hard Red Winter (Kansas City Board of Trade), and Hard Red Spring (Minneapolis Board of Trade). In commodity vernacular, each type of Wheat Futures contract is typically referred to by the city in which it is traded, such as "Chicago" is used instead of "Soft Red Winter", while Kansas City and Minneapolis refer to Hard Winter and Spring respectively.

The primary use for wheat is flour, the key ingredient in breads, pastas, crackers, and many other food products. Wheat is among the most important of cereal crops grown in many regions of the world, including both North America and Canada. Wheat by-products are also used in livestock feeds. Wheat has significant industrial applications, too, as an ingredient in starches, adhesives, and coatings.

Agriculture commodities are the world's largest industry. On a worldwide basis, more people are involved with agriculture than all other occupations combined. There may be only 2 million people actively involved in production agriculture in the United States, but according to the International Food Information Council, one out of every six jobs is tied, in some way, to the agricultural commodity industry. All aspects of industry, from producer to researcher, teacher to commodity broker and mechanic to truck driver, agriculture support all of the parts of our American economy.

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Wheat Futures Commodity Contract Specifications

CBOT Wheat Futures

Specs 5,000 bushels

Deliverable Grades: No. 2 Soft Red, No. 2 Hard Red Winter, No. 2 Dark Northern Spring, and No. 2 Northern Spring at par. Substitutions at differentials established by the exchange

Tick Size: 1/4 cent/bu ($12.50/contract)

Price Quote: Cents and quarter-cents/bu

Contract Months:Jul, Sep, Dec, Mar, May

Last Trading Day:The business day prior to the 15th calendar day of the contract month

Last Delivery Day: Last business day of the delivery month. For contracts with delivery in March 2000 and subsequent months: Seventh business days following the last trading day of the delivery month

Trading Hours: Open Outcry: 9:30 a.m. - 1:15 p.m. Chicago time, Mon-Fri.
Electronic (a/c/eSM): 8:30 p.m. - 6:00 a.m. Chicago time, Sun.-Fri.
Trading in expiring contracts closes at noon on the last trading day

Ticker Symbols: Open Outcry: W. Electronic (a/c/e): ZW

Daily Price Limit: 30 cents/bu ($1,500/contract) above or below the previous day's settlement price (expandable to 30 cents/bu). No limit in the spot month (limits are lifted two business days before the spot month begins)

CBOT Wheat Options

Trading Unit: One CBOT Wheat futures contract (of a specified contract month) of 5,000 bu

Tick Size: 1/8 cent/bu ($6.25/contract)

Strike Price Intervals: 5 cents/bu for the first two months and 10 cents/bu for all other months. At the commencement of trading, list 5 strikes above and 5 strikes below the at-the-money strike

Contract Months: Jul, Sep, Dec, Mar, May; a monthly (serial) option contract is listed when the front month is not a standard option contract. The monthly options contract exercises into the nearby futures contract. For example, an August option exercises into a September futures position

Last Trading Day: For standard option contracts: The last Friday preceding the first notice day of the corresponding wheat futures contract month by at least two business days.
For serial option contracts: The last Friday which precedes by at least two business days the last business day of the month preceding the option month

Exercise: The buyer of a futures option may exercise the option on any business day prior to expiration by giving notice to the Board of Trade Clearing Corporation by 6:00 p.m. Chicago time. Option exercise results in an underlying futures market position. Options in-the-money on the last day of trading are automatically exercised

Expiration: Unexercised options expire at 10:00 a.m. Chicago time on the first Saturday following the last day of trading

Ticker Symbols: Open Outcry: WY for calls/WZ for puts
Electronic (a/c/e): OZW

Daily Price Limit: 30 cents/bu ($1,500/contract) above or below the previous day's settlement premium. Limits are lifted on the last trading day

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