Electronic Options Trading

The Chicago Mercantile Exchange (CME) announced on Nov. 1 that it will launch electronic trading of options on CME Live Cattle and Lean Hog futures beginning Dec. 4. The new functionality will provide a direct trading opportunity for traders who specialize in trading price volatility and for hedgers who are interested in purchasing price protection.

The new electronic livestock options will include a market marker program with the ability for mass quoting of options prices. Trading will take place during the same hours as the livestock options traded in open outcry for side-by-side trading from 9:05 a.m. to 1:02 p.m. Central Time for Live Cattle options.

Electronically traded options on livestock futures enable customers to receive immediate trade execution notification. The functionality provides automated bookkeeping with instantaneous clearing account balances, market transparency and request for quotes.

“I think producers will find this to be a useful enhancement to an important risk management tool,” says Mike John, NCBA president and Missouri cattle producer.  For more information, visit www.cme.com.