- Why has CME Group listed options on BCOM futures?
- What is the underlying index and where can I find the methodology?
- What makes this contract offering unique?
- What is the listing cycle?
- What are European-style options?
- What strike prices are available?
- What are the position limits for these options contracts?
- What are the codes?
- What are the fees?
- Where can I source liquidity for block trades?
1. Why has CME Group listed options on BCOM futures?
Over the last few years, due to the margin and other efficiencies that CME Group offers, open interest in BCOM futures and swaps products have grown to 250K contracts on average in Q3 2024, up 15% increase vs. 2023. Active participants in these markets are eager to see more growth with the introduction of options on Bloomberg Commodity Index futures.
2. What is the underlying index and where can I find the methodology?
Details of the methodology of the Bloomberg Commodity Index (BCOM) can be found on the Bloomberg website.
3. What makes this contract offering unique?
CME Group provides market participants with the ability to hedge and express their views on these commodity index options at a listed venue with all of the capital efficiencies available, such as initial margin and margin offsets against the underlying futures contracts listed at CME Group.
4. What is the listing cycle?
The listing cycle for the options on BCOM futures matches the BCOM futures. It is four of the nearest quarterly months and one additional December contract.
5. What are European-style options?
European-style options can be exercised only on the option’s expiration day. This reduces some of the uncertainty for option sellers, as they cannot be assigned prior to expiration (American-style options can be exercised and assigned at any time up to expiration).
6. What strike prices are available?
At a high level, CME Group is attempting to ease the messaging burden on our liquidity providers while providing clients with the necessary strikes and hedging tools needed to adequately trade in this market. Below is a breakdown of the strike listing rules at launch:
When listed, strikes listed for 25% above and 25% below the at-the-money strike at 2 index point increment.
When less than 90 days remaining until expiration (DTE), strikes listed for 15% above and 15% below the at-the-money strike at 1 index point increment.
When less than 60 days remaining until expiration (DTE), strikes listed for 10% above and 10% below the at-the-money strike at 0.5 index point increment. When less than 30 days remaining until expiration (DTE), strikes listed for 5% above and 5% below the at-the-money strike at 0.25 index point increment.
7. What are the position limits for these options contracts?
The position limits for these options contracts are determined in conjunction with the positions in the underlying futures. View more information on position limits.
8. What are the codes?
| Product | Underlying Index | CME Globex | Bloomberg Front Month |
|---|---|---|---|
| Options on Bloomberg Commodity Index futures | BCOM | AW (Clearing: 70) | DNA |
9. What are the fees?
Options on Bloomberg Commodity Index futures are listed on the CBOT DCM and follow the CBOT Fee Schedule under the Equity Bloomberg tab. View the fee schedule.
10. Where can I source liquidity for block trades?
See a list of firms who have indicated they are willing and able to provide pricing for Commodity Index products.
Commodity Index futures and options
Power your commodity trading strategy with greater capital and margin efficiency using listed Commodity Index futures, options and swaps.
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.
