USD RBD Palm Olein Options contract (OPOL)

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What is OPOL?

USD RBD Palm Olein Options contract (OPOL) is a US Dollar-denominated options contract in Bursa Malaysia Derivatives palm oil complex, with USD RBD Palm Olein Futures (FPOL) contract as its underlying instrument. It is the world’s first options contract on RBD Palm Olein, enabling users to hedge their exposure on price fluctuations. This adds on to the array of possible risk management tools available for palm oil players as options contracts have very different risk-reward profiles to futures contracts. OPOL is traded electronically on CME GLOBEX®, allowing traders access from anywhere around the world.


Why OPOL can be a good hedging instrument?

1. Managing risk exposure in the market

  • Traders can use options to better manage their risk exposure as the maximum loss will be known to them.

2. Protection against adverse price movements

  • Traders will utilize options contacts as an insurance policy against adverse price movements. They will be willing to pay the option premium for this insurance instead of using futures contract to hedge as adverse price movements may affect their profitability.

Contract Specifications

Contract Code

OPOL
Calls: C OPOL
Puts: P OPOL
Underlying Instrument US Dollar Denominated RBD Palm Olein Futures Contract (FPOL)
Contract Unit 1 FPOL Contract (Equivalent to 25 MT)
Minimum Premium Fluctuation USD 0.25 per MT
Contract Months Spot month and the next 3 succeeding months. Thereafter, alternate months i.e. odd months up to 24 months ahead.

The first spot option contract month will be trading the 3rd month FPOL contract.
Trading Hours

First trading session: Malaysian time: 0900 hours to 1200 hours.

Second trading session: Malaysian time: 1330 hours to 1800 hours.

Exercise Price Interval

At least 11 Exercise Prices (5 are In-the-Money, 1 is At-the-Money and 5 are Out-of-Money) will be set at intervals of USD 10 per metric ton for all contract months.

Exercise

1. European style exercise

2. An Option is In-the-Money if the Daily Settlement Price of the underlying US Dollar RBD Palm Olein Futures Contract on the Expiration Date is above the Exercise Price of the Option (in the case of a Call Option), or below the Exercise Price of the Option (in the case of a Put Option).

Settlement

Positions in the underlying FPOL Contract, as a result of the Exercise of an Option, will be assumed by the parties to the Option on the first Business Day after the Final Trading Day.

Final Trading Day and Expiration Date

1. 15th day 2 months prior to the spot month of the underlying FPOL Contract or, if the 15th day is non-Business Day, on the last Business Day preceding the 15th day.

2. Trading in the expiring series of the Contract ceases at 1800 hours (Malaysia time) on the Final Trading Day.

Speculative Position Limits
  • 10,000 futures equivalent contracts net long or net short for any single month.
  • 15,000 futures equivalent contracts for all contract months combined.

*Speculative Position Limits are combined together with the FPOL contract.

Ticker Code
  • Bloomberg: FPOA Comdty OMON
  • Refinitiv : <0#FPOL+>
Resources for Download

Brochure
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