Client Management Advisory Notice
From | Client Management
Subject | CME Update 02-06 VIII. Expanded Strike Price Range For Lean Hog Options.
Effective Date | 06/28/02
Notice Number | CM#0260
EXPANDED STRIKE PRICE RANGE FOR LEAN HOG OPTIONS At its Regular Meeting on June 12, 2002, the Board of Directors approved a recommendation to expand the strike price range for Lean Hog Options from 14 cents to 24 cents. Under the CFTC certification procedure, the approval will be effective for all contract months on Monday, June 17, 2002. Rule 6101.E.1 has been amended as follows, with deletions bracketed and overstruck and additions underlined: 6101. OPTION CHARACTERISTICS E. Exercise Prices 1. Regular-Cycle Options The exercise prices shall be stated in terms of cents per pound. For all contract months, exercise prices shall be at intervals of 2�; e.g., 60�, 62�, 64�, etc. In addition, for the first two contract months, some exercise prices shall also be at intervals of 1�; e.g., 60�, 61�, 62�, etc., as is described below. At the commencement of option trading in a contract month, the Exchange shall list put and call options in a range [14�] 24� above and below the previous day 's settlement price of the underlying futures contract. When a sale, bid, offer or settlement price in the underlying futures contract occurs at, or passes through an exercise price, the Exchange shall list on the next trading day put and call option contracts at the next higher (or next lower) exercise price within a [14�] 24� range above (or below) the exercise price at which or through which the underlying futures sale, bid offer or settlement price occurred. When a contract becomes the second nearest contract month, the Exchange shall add exercise prices at 1� intervals at a range 6� above and below the previous day 's settlement price. Thereafter, when a sale, bid, offer, or settlement price occurs at, or passes through, any exercise price, the Exchange shall on the next trading day list put and call options at the next higher (or next lower) exercise price within a 6� range above (or below) the exercise price through which the underlying futures sale, bid, offer, or settlement price occurred. In addition, when a sale, bid, offer, or settlement price occurs at, or passes through, any even-numbered exercise price; e.g., 60�, 62�, 64�, the Exchange shall on the next trading day list put and call options at the next higher (or next lower) even-numbered exercise price within a [14�] 24� range above (or below) the exercise price through which the underlying futures sale, bid, offer, or settlement price occurred. New options may be listed for trading up to and including the termination of trading. The Board may modify the provisions governing the establishment of exercise prices as it deems appropriate, subject to the provisions of Section 5a(a)(12)(A) of the Commodity Exchange Act and CFTC regulations thereunder. If you have any questions, please contact Mr. Jack Cook, Economist, Commodity Product Development Department, at 312-930-3295, or Mr. Paul Peterson, Director, Commodity Product Development Department, at 312-930-4587.