Capesize

13750

May-17
450.00 3.38%

Panamax

8300

May-17
-200.00 -2.35%

Iron Ore

61.5

May-17
-0.50 -0.81%

Sing 380

292.65

Jun-17

Coking Coal

177

May-17
1.00 0.57%

Nola Urea

172

May-17
3.00 1.78%

Iron Ore Options


What are Iron Ore Options?


Iron ore options are financial contracts much like a futures contact that allow end users to hedge their future risk by taking an equal and opposition position to their physical exposure.

Unlike futures however, options have limited risk in that the holder of the option is only exposed to the premium of the contract.

"The next wave of risk management products is emerging in this exciting new commodity class."

Types of contract

Call options give the holder the right, but not the obligation to buy a financial security at a predetermined price (the strike price) during a predetermined time (exercise date).

Put options give the holder the right, but not the obligation to sell a financial security at a predetermined price during a predetermined time.

The contract is sold by the writer of the option, to an option holder. The holder of the option foregoes the premium (to the writer) but only exercises the right to buy (call option) or sell (put option) should the position be “in the money” upon expiry. These contracts allow producers, users and investors to manage the risk associated with volatile iron ore prices, whilst minimising risk.

Iron Ore Market Useful Links