Wheat Calendar Spread Options

Wheat Calendar Spread Options Meaning:
In commodity market terminology, Wheat Calendar Spread Options refers to options on the price differential between two Wheat futures contract months, instead of on the Wheat futures price itself. Wheat is a grain grass which originated in the Fertile Crescent area of the Near East, and is now cultivated worldwide. Wheat grain is a world staple food used in the making of bread flour, breakfast cereal, noodles, beer and other alcoholic products, as well as biofuel.

Wheat Calendar Spread Options Example:
Contracts for Wheat Calendar Spread Options are traded on the Chicago Board of Trade and the CME Groupís Globex electronic trading platform. The option contract size is one long Wheat futures contract (of a particular month), and one short Wheat futures contract (of a different specified month), each consisting of 5,000 Bushels. Prices are quoted in U.S. Dollars with a minimum fluctuation of 1/8 cent per bushel or $6.25 per option contract.