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Thursday, August 09, 2012 9:52:15 PM
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Definition of 'Pork Bellies'
A cut of pork that comes from the belly of a pig. Pork bellies were traded in the futures market, as they are important components of meat products, such as bacon. Trading in pork bellies futures began in 1961 on the Chicago Mercantile Exchange (CME), and allowed meat packers to hedge the volatile pig market.
Investopedia explains 'Pork Bellies'
Pork bellies became the iconic commodity for the futures market's representation in popular culture, and has been mentioned in a variety of films relating to investing, such as "Trading Places". While they were a major future traded for decades, their waning popularity in trading led to the CME to halting trading in 2011.
Read more: http://www.investopedia.com/terms/p/porkbellies.asp#ixzz236VOgjh9
Pork Belly Futures And Options
Free Pork Belly Futures Trading eGuide
Chicago Merchantile Exchange (CME) began trading Frozen Pork Belly futures in 1961 - the first futures contract based on frozen, stored meats. Trading in Frozen Pork Bellies contracts was developed as a risk management device to meet the needs of meat packers who processed pork and had to contend with volatile hog prices as well as price risks on processed products held in inventory.
Thus, the futures contract was designed to help processors and warehouse operators manage these price risks. Hence, the Frozen Pork Bellies futures contracts performs the same two primary functions common to many futures contracts, that of: guiding inventories and establishing forward pricing.
Contract Specifications
Trading Unit
Frozen Pork Belly Futures: 40,000 pounds of frozen pork bellies cut and trimmed
Frozen Pork Bellies Options: One Frozen Pork Belly Futures Contract
Fresh Belly Options: One Fresh Pork Belly Futures Contract
Pork Cutout Futures: 40,000 lbs times Pork Cutout Index
Pork Cutout Options: One Pork Cutout Futures Contract
Trading Hours
Frozen Pork Belly Futures: 9:10 a.m. to 1:00 p.m. LTD (12:00pm)
Frozen Pork Belly Options: 9:10a.m. to 1:02 p.m. LTD (1:00pm)
Fresh Belly Options: Monday/Friday 7:00 a.m.- 1:02 p.m.
Pork Cutout Futures: Monday/Friday 7:00 a.m. - 1:10 p.m.
Pork Cutout Options: Monday/Friday 7:00 a.m. - 1:12 p.m.
Trading Months
British Pound Futures: Six months in the March quarterly Cycle March, June, Sep, Dec.
British Pound Options: Four months in the March cycle and two months not in the March cycle(serial months), plus 4 weekly Expiration options
Point Description
Frozen Pork Belly Futures and Options: 1 point = $.0001 per pound = $4.00
Fresh Belly Options: 1 point = $.0001 per hundred weight = $4.00
Pork Cutout Futures: 1 point = $0.01 index points = $4.00
Pork Cutout Options: 1 point = $.0001 per index points = $4.00
Contract Listings
Frozen Pork Belly Futures: Five months of February, March, May, July, and August.
Frozen Pork Belly Options: Eight months of February, March, May, July, and August, and Flex Options.
Fresh Belly Options: Two month of January, March, May, July, August, September, November and Flex Options.
Pork Cutout Futures: Four months in a monthy cycle
Pork Cutout Options: Two months on a monthly cycle
Limits
Frozen Pork Belly Futures: $0.03/lb, 300 points, Expandable price limits see Rule 8302
Pork Cutout Futures: $0.02/lb See Rule 9702.D
Pork Cutout Options: $0.02/lb
Minimum Price Fluctuation
Frozen Pork Belly Futures: 0.00025 = $10.00 Frozen Pork Belly Options: 0.00025 = $10.00 Regular, 0.000125 = $5.00 Cab Fresh Belly Options: 0.00025 = $10.00 Regular, 0.000125 = $5.00 Cab
Source: here
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