1. What are lithium and cobalt options?

Lithium Hydroxide and Cobalt options are cash-settled, European-style expiry, monthly options that expire against the final settlement price of their respective futures contracts, namely Lithium Hydroxide CIF CJK (Fastmarkets) and Cobalt Metal (Fastmarkets) futures.

2. What are the contract symbols for the options?

The contract symbols for the option contracts are:

  • Lithium Hydroxide CIF CJK (Fastmarkets) Average Price Option - LHO
  • Cobalt Metal (Fastmarkets) Average Price Option – COO

3. How can I trade Lithium and Cobalt options?

The options are available to trade on-screen via CME Globex and for submission for clearing through CME ClearPort. ClearPort trades can be submitted bilaterally between counterparties or via permissioned brokers. To find more information about CME ClearPort registration, visit Registering for CME ClearPort

4. What are the contract specifications?

The options trade in a unit size equivalent to one metric ton, the same size as the underlying futures contracts. The contracts are priced in U.S. dollars and cents per kilogram for lithium and U.S. dollars and cents per pound for cobalt. The minimum price fluctuation is $0.01 per contract unit.

Click on the links below to view the full contract specs:

5. What are the listed contract months for the options?

The lithium contract is listed for 24 consecutive months. The cobalt contract is listed for the current year and the next four calendar years.

6. What are the strike price increments for the options?

The strike price increments are $0.25 per contract unit for both.

7. When do the options expire?

Options expire concurrently with the underlying futures contract. For lithium, this occurs on the last Exchange business day of the contract month. For cobalt, however, expiration takes place on the last UK business day of the contract month. If the latter is not an Exchange business day, trading terminates on the preceding Exchange business day.

8. What does the final settlement price of the futures represent?

The final settlement price of the underlying futures contracts is equal to the floating price of the respective contract as assessed by Fastmarkets. In the case of lithium, the floating price is the monthly average of all price assessments for lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price cif China, Japan and Korea, $/kg during the contract month. For cobalt, it is the monthly average of all assessments of cobalt standard grade, in-whs Rotterdam, $/lb. (using the mid-price of daily range).

9. When can I exercise the options?

The options are European-style expiry, meaning that they can only be exercised at expiry. The options are cash-settled using the final settlement price of the underlying futures contract. No manual exercise of the options is necessary, they are automatically exercised.

10. What are the hours of trading?

CME Globex pre-open: Sunday 4:00 p.m. - 5:00 p.m. Central time/CT Monday – Thursday 4:45 p.m. - 5:00 p.m. CT

CME Globex open: Sunday 5:00 p.m. – Friday 4:00 p.m. CT with a daily maintenance period from 4:00 p.m. - 5:00 p.m. CT

CME ClearPort: Sunday 5:00 p.m. - Friday 4:00 p.m. CT with no reporting Monday - Thursday from 4:00 p.m. – 5:00 p.m. CT

11. How can I get set-up for trading Lithium and Cobalt options?

Contact your clearing member or metals@cmegroup.com to get more information on getting set-up to trade the contract on CME Globex and/or as a block trade on CME ClearPort. Participating interdealer brokers can be found under Brokers for Battery Metals

12. What is the block trade minimum for these options?

There are minimum quantity and reporting time requirements for lithium and cobalt block trades. The minimum block trade size is two contracts, and trades need to be reported by the broker, or by the counterparties for a bilateral trade, within 15 minutes of execution.

13. Where are the official product rules for the option contracts found?

For the Lithium option contract, please see COMEX Rulebook [hyperlink to COMEX Chapter 700]

For the Cobalt option contract, please see COMEX Rulebook [hyperlink to COMEX Chapter 690]

For more information on our Lithium and Cobalt option contracts, please contact a member of our metals team at metals@cmegroup.com.

All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

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