Random Length Lumber Futures & Options Brochure

Cash lumber prices are unpredictable and volatile. Supplies can be constrained due to mill closings, environmental policies and other factors. Demand also tends to shift rapidly based on interest rates and other economic conditions that affect housing starts. As a result, lumber prices react to supply and demand imbalances with frequent and often extreme changes. Highly volatile prices can mean opportunity for large profits. But in an industry like lumber – valued at over $30 billion for the North American market – where costs are high and margins are tight, volatile prices can also mean risk of loss, sometimes devastating loss. This guide provides in depth insights into how these contracts work, who uses them and why. It includes hedging examples, option basics and commonly used trading strategies using these contracts. It also explains exchange for physicals and the detailed contract specifications you need to start trading.

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Futures & Options Trading

As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through the CME Globex electronic trading platform and trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort.

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CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX, and COMEX.