Electronification of Agricultural futures and options has changed the way markets are traded and how liquidity is provided – creating opportunities for traders around the globe. Thanks to advancements in technology, fundamental information impacting grain and oilseed markets is available 24 hours a day. This has led to increases in trading and deeper liquidity during non-US hours. In fact, over 14% of ag options volume is now transacted electronically during non-US hours.
Why volume is growing
The increase in volume is being driven by traders in Europe and Asia who are increasingly looking to hedge risk and capitalize on opportunities during their own trading hours. CME Group’s Ag options are among the most transparent and accessible grain, oilseed, and livestock options markets for traders in Asia and Europe.
Among the factors driving this growth are:
- Narrowing of bid/ask spreads during non-US hours
- Additional trading tools available during all trading hours
- Customized option strategies via Request for Quote (RFQ)
Block and cross transactions, which became available in 2018, allow for direct access to major liquidity providers. Trading on CME Globex will continue to be the deepest, most liquid, and most cost-efficient way to execute ag options trades. However, crosses and blocks complement the deeply liquid central limit order book and provide an additional way for traders to execute size or complex option spreads.
Liquidity providers have established global operations offering risk mitigation around the clock. As a result, traders outside the US can now access the more liquid ag options markets to execute hedging strategies in their own time zones.
For more information on CME Group’s diverse offering of Agricultural options, visit https://www.cmegroup.com/agoptions.