CME Group offers options on many of our listed futures contracts including, but not limited to, COMEX Gold, Silver, Copper, and Hot Rolled Coil Steel. While the majority of Metals options transact electronically, knowing where and how to access options markets can be beneficial to implementing effective price risk management strategies.
Where are Metals options traded?
Since the start of 2021, approximately 83% of all CME Group Metals options activity has taken place electronically through CME Globex ‒ with the balance bilaterally negotiated and transacted via block trades and submitted for clearing through CME ClearPort.
Trading options on-screen, however, is more than just point and click.
Accessing option markets on CME Direct
CME Direct offers clients the ability to customize views to suit specific needs. If a user is strictly interested in outright option quotes, they can simply open a “Quick Options Grid” for any specific metal such as the Silver screen below.
This will display all outright option quotes and all available strikes for that particular metal. One can easily expand or contract the amount of shown strikes for each contract month.
Request for Quote (RFQ)
Perhaps your interest is a bit more complex than just outright option quotes. The Request for Quote (RFQ) function allows users to ask for customized markets. Whether you are looking for outrights, spreads, straddles, strangles, 1x2s, or whatever else you may need, RFQ is fully customizable. It is not necessary to include volume in the RFQ.
Once your RFQ is submitted, it will display so everyone has the opportunity to respond.
Submitted RFQs can be added to your watch items. Once responded to, they can be transacted on electronically, just as you would trade an outright option.
Learn more on uncovering option liquidity via RFQ- Uncovering Copper Option Liquidity via RFQ - CME Group.
Directed Request for Quote (DRFQ)
Some Metals option contracts offer Directed Request for Quote (DRFQ) capabilities through CME Direct. A DRFQ is used to request and privately negotiate quotes for block trades and subsequent submission for clearing via CME ClearPort. In order to participate, users must establish DRFQ relationships with counterparties via “Contacts” in the Directed RFQ Contact Directory.
Learn more about DRFQs here.
CME Direct provides users the ability to customize and request option quotes, monitor online markets, and execute electronically all on one platform. Whether your needs are simple or complex, when markets are moving and you want to implement risk management strategies, knowing how to access option markets can help you hedge your metals exposure.