4.2.1.1. Options Quotations
Options for any given month are listed online by the exchange at a variety of strike prices for both calls and puts. See the Sample Corn Options Quote Table that follows for an example of listed quotations from CME. Quotations list the closing price from the previous day’s trading (Prior Settle), the high and low prices transacted on the current trading day, and the price of the latest completed trade (Last). Volume refers to the number of contracts traded during the current trading day.
In the table corn futures on a day in August 2016 closed the previous day at 332’0, or $3.32 per bushel. An examination of the data shows that calls are currently trading lower across the board than the previous day’s close, while puts are trading higher. Volume is light, and trading is heaviest among puts and centered at strike prices close to the underlying.
Remember that calls are in the money when the market price is higher than the strike price; puts are in the money when the market price is lower than the strike. At a strike price of 300’0, the prior day’s close for the call option was 34’5, meaning that the premium for that last transaction was 34 5/8 cents. This premium contains an intrinsic value of 32’0 and a time value of 2’5. At a strike price of 320’0, the previous day’s settle of 20’0 represents a premium with an intrinsic value of 12’0 and time value of 8’0. Time value increases as the strike price approaches the market value of the underlying. On the other side of the ledger, puts are well out of the money at a strike price of 300’0, and the premium of 2’5 is exclusively time value.
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Sample Corn Options Quote |
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Dec 2016, American Option, Prior Settle: 332’0 |
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Calls |
Strike Price |
Puts |
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