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Silver Futures and Options Education
Silver futures and options quick facts:
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5,000 ounce contract
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One cent move equals $50
The History of Silver and Silver Futures
As early as 700 B.C., the Mesopotamian
merchants used silver as a form of exchange. Later, many
other civilizations also came to recognize the inherent
value of silver as a trading metal.
In 1792, silver assumed a key role in the
United States monetary system when Congress based the
currency on the silver dollar, and its fixed relationship to
gold. Silver was used for the nation's coinage until its use
was discontinued in 1965.
Today, silver is sought as a valuable and practical
industrial commodity, and as an appealing investment. The
largest industrial users of silver are the photographic,
jewelry, and electronic industries often use silver futures
and options to hedge their risk. Silver is used in cell
phones, plasma TVs, computers and many other electronic
devices. Unlike
gold,
silver is considered non-recyclable because of its minute
density withing the electronics that it is used for. In
other words, it is unlikely that someone will break apart
their cell phone to reclaim 10 cents worth of silver used in
its production.
Mining companies, fabricators of finished products, and
users of silver-content industrial materials can use the
COMEX Division silver future
and silver options contracts to
manage their price risk. COMEX has recently merged to become
part of (NYMEX). As a precious metal, silver and
silver future
contracts also play an important role in investment
portfolios as an inflationary hedge.
During the September 11 terrorist attacks the COMEX was
destroyed but within days the
silver futures and silver
options markets were trading again. This is a testament to
the strength and reliability of the silver futures markets
and the commodity exchanges.
Why Trade COMEX Division
Silver Futures and Options?
Silver's importance in world markets and responsiveness to
world events make COMEX Division
silver future
and options an important risk management tool for commercial
interests as well as an exciting, potentially rewarding
opportunity for those investors who seek to profit by
correctly anticipating price changes.
Silver Future Contracts
Silver futures contracts are firm
commitments to make or accept delivery of a specified
quantity or quality of a commodity during a specific month
in the silver futures at a price agreed upon at the time the
commitment is made. Approximately 1% of silver futures
contracts traded each year result in delivery of the
underlying commodities. Instead, traders generally offset
their silver futures positions before their contracts
mature. The difference between the initial purchase or sale
price of the silver futures contact and the price of the
offsetting transaction represents the realized profit or
loss.
Trading in COMEX Division
silver future contracts is
conducted for delivery during the current calendar month,
any January, March, May, and September thereafter falling
within a 23-month period and any July and December falling
within a 60-month period, beginning with the current month.
Silver Options
Because of the global nature of the
metals markets, their prices can be volatile. The metals
industry and other commercial market participants have
learned to cope with this price uncertainty by actively
hedging against adverse silver futures price movements.
While silver futures are among the primary risk management
tools available, silver options on futures open a host of
versatile, economical trading strategies.
COMEX Division Silver
Futures and Options
Contract Specifications
Trading
Unit
Silver
Futures:
5,000 troy ounces
Options:
One COMEX Division silver futures contract
Trading
Hours
Silver
Futures and Options:
8:25A.M. To 1:25P.M., New York time, for the open outcry
session.
Trading
Months
Silver
Futures:
Trading is conducted for delivery during the current
calendar month, the next two calendar months, any January,
March, May, and September thereafter falling within a
23-month period, and any July and December falling within a
60-month period beginning with the current month.
Silver
Options:
The nearest five of the following contract months: March,
May, July, September, and December. Additional contract
months - January, February, April, June, August, October,
and November - will be listed for trading for a period of
two months. In addition, a 24-month option is added on a
July - December cycle.
Price
Quotation
Silver
Futures and Options:
Dollars and cents per troy ounce.
Maximum
Price Fluctuation
Silver
Futures:
Price changes for outright transactions, including exchanges
of silver futures for physical (EFP), are in multiples of
one-half cent ($0.005) per troy ounce, equivalent to $25 per
contract. For straddle or spread transactions, as well as
the determination of settlement prices, the price changes
are registered in multiples of one-tenth of a cent ($0.001)
per troy ounce equivalent to $5 per contract. A fluctuation
of one cent ($0.01) is equivalent to $50 per contract.
Maximum
Daily Price Fluctuation
Silver
Futures:
Initial price limit of $1.50 above or below the preceding
day's settlement price. Two minutes after either of the two
most active months’ trades at its limit, trades in all
months and in silver options will cease for a 15-minute
period.
Options:
No Price Limit.
Last
Trading Day
Silver
Futures:
At the close of business on the third last business of the
maturing delivery month.
Silver
Options:
Second Friday of the month prior to the delivery month of
the underlying futures contract. Two-month options - second
Friday of the calendar month which is two months after the
month in which the option is listed.
Delivery
Silver delivered against the silver
futures contract must bear a serial number and identifying
stamp of a refiner's officially listed brand. Delivery must
be must be made from a warehouse or vault licensed or
designated by the Exchange specifically for the storage of
silver.
Delivery Period
The first delivery day is the first
business day of the delivery month; the last delivery day is
the last business day of the delivery month.
Exchange of Futures for Physicals (EFP)
The buyer or seller may exchange a
silver futures position for a physical position of equal
quantity by submitting a notice to the Exchange. EFPs may be
used to either initiate or liquidate a futures position.
Trading Symbol
SI
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