Dairy Futures and Options Tutorial

What is a Strike (Exercise) Price?

• Designated price leves for which PUT and CALL options are traded. Strike prices are based on previous day's futures price. As a futures price goes up, the range of strike prices goes up. As a futures price goes down, the range prices goes down.

• Strike prices are defined in fixed increments

• Class III Options

  • CME: $0.25/cwt
    • Example: $12.00, $12.25, $12.50
• Butter Options
  • CME: $0.02/lb
• Non-Fat Dry Milk Options
  • CME: $0.02/lb, nearby month: $0.01/lb
    • Example: $1.00, $1.02, $1.04