Explain the benefits of using sdnc instead of regular option

Reference no: EM133612137

Question: In the article "2 chances to profit with smart marketing strategies", the author mentions short-dated new crop (SDNC) options. These options still follow the main dynamics on the regular options that we discussed during the semester. The difference between SDNC options and regular options is that SDNC options expire earlier. For example, regular options on the corn futures contract for December delivery expire in December or very close to December. SDNC options on the corn futures contracts for December delivery have different expiration dates before December. There are SDNC options on the corn futures contracts for December delivery that expire in May, June, July, August and so on. Therefore, gains and losses with the SDNC options on the corn futures contracts for December delivery will still be based on changes in the corn futures price for December delivery, but these options will expire before December (i.e. before the regular options). Explain the benefits of using SDNC instead of regular options.

Note: Think about what SDNC options are, read the CME Group page and explain what they say there.

Reference no: EM133612137

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