ASX Grain Options - Frequently asked questions

If, after reading this section, you still have an unanswered question please email your question to ASX Grain Futures

Which ASX Grain Futures have exchange traded options listed?
Options are available over all ASX Grain Futures commodities: NSW Wheat (VW); WA Wheat (WK); Eastern Australia Feed Barley (UB); Eastern Australia Canola (VC); and Australian Sorghum (US).

What contract months have options listed?
Further information concerning the options currently listed over futures contracts can be found via the following links: NSW Wheat (VW); WA Wheat (WK); Eastern Australia Feed Barley (UB); Eastern Australia Canola (VC); and Australian Sorghum (US). Note: the option Contract Month is the month the option expires, which is the month before the futures contract month. That is, December 2012 options are over January 2013 futures. 

What is the minimum options order I can place?
One contract, which equals 20 tonnes.

What are the trading hours of the Grain Options market?
Same as ASX Grain Futures. All time is AEST/AEDT.

Can I trade options on expiry day?
You can trade options till 4.00 pm on the Declaration Date, at which time settlement of the underlying futures contract is deemed. For further information concerning the final time for exercise request lodgement please refer to the applicable following contract specification: NSW Wheat (VW); WA Wheat (WK); Eastern Australia Feed Barley (UB); Eastern Australia Canola (VC); or Australian Sorghum (US).

Where do I find quotes on ASX Grain Options?
The following links for NSW Wheat (VW); WA Wheat (WK); Eastern Australia Feed Barley (UB); Eastern Australia Canola (VC); and Australian Sorghum (US) provide a complete price list for ASX Grain Options for the particular commodity and contract month. All price information on the ASX website is delayed by 20 minutes. Vendor Code information can be found here.

How do you calculate the dollar value of a premium?  
To calculate the dollar value of a premium, multiply the quoted premium by the size of the contract (20 tonnes).
For example, if you purchase one UB put option for a premium of $5, the dollar value of the option is $100 ($5 x 20).

Are there any ASX charges involved in trading options?  
Yes. ASX Clear (Futures) charges a contract registration fee of $2.50 per contract (GST exclusive) for each contract traded. If you exercise an option, a registration fee for the futures will be charged $2.50 per contract (GST exclusive). Further information concerning ASX Fees can be found here (PDF 84KB).

Do I have to pay margins when I trade options?  
ASX Grain Options are margined using futures style margining. More information on margins and how they are applied to ASX Grain Options can be found here.

Is it true that most options expire worthless? 
No, this is not true. Around 55% of equity options traded on ASX are closed out before expiry, around 15% are exercised, and around 30% expire worthless. It is important to understand that the best result for the hedger is for the option to expire worthless. For example, when a put option is bought to protect a physical grain holding, the best result for the hedger is for the grain to increase in price, in which case the put option may well expire worthless. The option trade should always be considered in the context of the overall strategy, particularly if it is a hedge.

What is the process by which exercise  notices are assigned to a sold option?
When the option buyer decides to exercise an option, they instruct their broker to lodge a Notice of Exercise with ASX Clear (Futures). ASX Clear (Futures) then randomly assigns that exercise to an account with an open sold position in the same Option Series. The following morning, the broker whose client has that account receives the Notice of Assignment, and advises the client that they have been exercised. Settlement of the futures transaction that results from exercise of the option takes place T + 1  - that is, one business day after the date the option buyer exercised the option.

How are options taxed?  
The taxation treatment of derivatives trading in futures and options can and will differ depending on your personal objectives. You should seek independent financial advice for clarification on this matter.