Indiana Grain Company, LLC

Posted: 03/08/10

By: tomgrisafi

We at Indiana Grain found this gem of information from the Wall Street Journal worth noting this morning.

Our friends at the CME Group are moving ahead with a plan to launch fear gauge volatility contracts in many of the products that have become increasingly popular to trade, including corn and soybeans.

As volatility instruments take hold in a variety of markets, the timing couldn't be better to move forward with this plan. The decision comes as a result of a license deal with the Chicago Board Options Exchange.

"I think the idea's going to be welcomed by a lot of markets," Phil Flynn, a Chicago-based energy market expert tells the Wall Street Journal. "The VIX formula CBOE has created for different indices has proven to be a valuable trading tool."

The CME plans to "launch an initial five contracts" by the middle of 2011. The contracts will utilize the methodology developed by CBOE, which will also develop new underlying indexes.

According to the WSJ, the CME and the CBOE have "tentatively" agreed that the first new products could include crude oil, corn, soybeans and gold.

Source: The Wall Street Journal

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