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Price Limit Update ......


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Price Limit Update ......

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  #1 (permalink)
Memphis,TN
 
 
Posts: 232 since Sep 2010

I was just wondering what exactly the numbers beside each of these Agricultural products meant, via the " Outrights " , and also, what exactly a Price Limit is ?

Does the Price Limit mean, there is a cap to the amount that you can make or lose in a given trading day
OR
is it the amount that if a Limit up/down occurs, that the market can not exceed these " Outright " prices


Just making sure I understand these numbers correctly

As always, I appreciate the help

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  #3 (permalink)
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mdsvtr View Post
I was just wondering what exactly the numbers beside each of these Agricultural products meant, via the " Outrights " , and also, what exactly a Price Limit is ?

Does the Price Limit mean, there is a cap to the amount that you can make or lose in a given trading day
OR
is it the amount that if a Limit up/down occurs, that the market can not exceed these " Outright " prices


Just making sure I understand these numbers correctly

As always, I appreciate the help

You got it right. Price limits prevent price of an instrument from being traded over/under a "reference" price which is nowadays reset daily (mostly the daily close). For instance, the image says that the limit for corn was changed from $0.25 to $0.30. That means that if Corn closes at 370 today, then tomorrow the price cannot trade above 400 or below 340. You might be getting confused by the pricing unit of 370 or 400. If that is so then check out the contract specs for corn and you will find that corn prices are in cents per bushel, so even though the corn price is referred to as 370, it is really $3.70. Apply a 30 cent price limit up and down and you get 400 and 340 or $4 and $3.40 respectively.

I think there are also limits in place by time - overnight limits are different from regular session limits.

Outrights are nothing but futures contracts. Calendar spreads are the difference between one futures contract vs another for the same product. For instance, CL has a contract listed, one for each remaining month in the current year plus 5 years forward. These are referred to as outrights. Now you can also trade the difference between CL July vs CL August and this is known as a Calendar spread. There are other spreads too like crack spreads and other inter product spreads that are also exchange traded.

Each listed contract has a specification that explains all this or has links to documents. You can look up these specs for any contract you are interested in.

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  #4 (permalink)
Memphis,TN
 
 
Posts: 232 since Sep 2010

As of toda ( June 22, 2015 ) , the Daily Price Limits for the following symbols are...

Soybean Oil = 0.02
So this means that... no matter how much Soybean Oil moves tomorrow ( Monday ) in price .... say it moves 1 full point ( a $600 ) move, that I would be capped at only being able to profit / lose $12 ( .02 x $600 = $12 )


Soybean Meal = $25
So this means that..... again, no matter how much Soybean Meal moves tomorrow ( Monday ) in price. ... say t too moves 1 full point ( a $100 ) move, that I'd be capped at only being able to profit / lose $25 OR is it $25 x each 1 point move of $100 = $2,500 ?

I can understand that if these small Max Price Limits are accurate , that this can save you from suffering a big loss if the market you are trading in happens to have bad news hit the news and goes into a Limit Down " Lock " period for days on end ..... but this also means that there's not much money to be made either

Thanks for anyone who can shed some light on the subject

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  #5 (permalink)
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The Limit Move values are limits in the pricing of the actual futures product.

The Limit Move in Soybean Oil is 2.5 cents per pound. Example: a move from 33.00 cents/lb to 35.50 cents/lb. The point value is $600, so a Limit Move would equate to a profit/loss of $1500.

The Limit Move in Soybean Meal is $25 per ton. Example: a move from 332.0 $/ton to 357 $/ton. The point value is $100, so a Limit Move would equate to a profit/loss of $2500.

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  #6 (permalink)
Memphis,TN
 
 
Posts: 232 since Sep 2010

Thanks Coastline,

appreciate your help and contribution to the thread

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