Crop Traders Are Piling Into a Booming Corner of Options Market
- Wild price swings have traders turning to short-term options
- Drought means crops are in worst conditions since 1988: USDA
A drought that’s ravaging US crops is prompting agricultural commodities traders to seek protection in a new and booming corner of the options market.
With prices moving sharply depending on the weather, traders are piling into short-term options to hedge every little bit of rain or dry forecast ahead. These products, which expire weekly or in different months than traditional contracts, accounted for a record 22% of all options transacted in June, according to CME Group Inc.