Stocks and Commodities Magazine

Newly added "short dated new crop options" for Grain Traders in the Futures Market

What are “short dated new crop options”?

Prior to a few years ago, grain traders wishing to speculate on the “new crop” price of corn, soybeans, or wheat, through options were required to purchase or sell options with expiration dates in the distant future. As a result of the excessive time value built into the option prices, short-term hedges or speculations on new crop prices were often high risk, and expensive, ventures. In response to the noted struggle, the CME Group launched a line of “short-dated new crop” options (SDNC).

According to the CME Group, short-dated new crop options provide a liquid, shorter term alternative to gaining exposure to the next growing season’s price action. If you are unfamiliar with the term “new crop”, it is simply the first futures contract month listed for trading that represents the commodity yield (supply) from the next harvest cycle.

To illustrate, corn is harvested in the fall (specifically October); thus, the December corn futures contract is the first contract month of the next growing cycle. Once we get beyond the December contract of one year, the next December becomes the “new crop”. The futures contracts with expirations prior to December (March, May, July, and September) are referred to as “old crop” because they represent the current growing cycle. In soybeans, the November contract is considered “new crop” and in CBOT wheat, the new crop contract is July.

These SDNC options differ from standard options in that they expire at various points throughout the growing cycle despite being written against a longer-dated new crop futures contract. Unlike traditional options which are tied to the next expiring futures contract, short-dated new crop options expire each month from January through September, but are tied to the upcoming December futures contract. In other words, in regard to standard options the January 2015, February 2015, and March 2015 options would be written against the March 2015 futures; the April and May options are tied to the May futures; and so on. Conversely, SDNC options expiring in January 2015, February 2015, March 2015, etc. would be tied to the December 2015 futures.


Read more about "short-dated new crop options" in the June 2015 issue of Stocks & Commodities Magazine


DeCarley Trading on Twitter

Carley Garner Trading Books

  • Higher Probability Commodity Trading, new Carley Garner book

    Higher Probability Commodity Trading, new Carley Garner book

    According to Phil Flynn, Fox Business News contributor, this is Carley Garner's "masterpiece"! Order from Amazon today! "A great read for both beginner and advanced commodity traders. Carley nails the seemingly impossible task of leveling the playing field by imparting vital concepts in easy to digest bites ...she doesn't leave out the harsh realities and heartbreak many overzealous speculators face." -- JON NAJARIAN, co-founder "I love the book... it's an MBA in trading for the
    Read More
  • Commodity Options the Book

    Commodity Options the Book

    It isn't free, but it's close! If this book saves you 2 ticks, you've recouped your investment.   Commodities are hot, as Jim Rogers would say.  Stagnant stocks and the massive bull rally in raw commodities have lured much of the attention away from Wall Street and toward down-town Chicago.  It is difficult to turn on the television or open the newspaper without being reminded of the impact that commodity prices have on our daily lives.   Traders
    Read More
  • A Trader's First Book on Commodities

    A Trader's First Book on Commodities

    The Simple, Practical, 100% Useful How-To Guide for New Commodities Traders   Before you trade commodities, you'll need significant practical knowledge of the associated risks and market characteristics. That's where this book comes in. You won't find boring theory or bewilderingly complex trading strategies here. Instead, you will find specific guidance on accessing commodity markets cost-effectively, avoiding common beginners' mistakes, and improving the odds of successful trades. Drawing on her extensive experience teaching traders, Garner shows how to
    Read More
  • Currency Trading in the FOREX and Futures Markets

    Currency Trading in the FOREX and Futures Markets

    Get a copy of Carley Garner's latest book at, or any major outlet! "Once again, Carley Garner demonstrates her ability to boil down complex concepts for individual traders. Trading Currencies in the FOREX and Futures Market will put budding currency traders ahead of the curve with its unique blend of the basics and some refreshingly unexpected material." ~ Karris Golden, Traders Press® "Carley is a smart trader and broker; she understands the markets and the importance of
    Read More

Newsletter Trial