Lean Hogs Options Explained

Lean Hogs options are option contracts in which the underlying asset is a lean hogs futures contract.

The holder of a lean hogs option possesses the right (but not the obligation) to assume a long position (in the case of a call option) or a short position (in the case of a put option) in the underlying lean hogs futures at the strike price.

This right will cease to exist when the option expire after market close on expiration date.

Lean Hogs Option Exchanges

Lean Hogs option contracts are available for trading at Chicago Mercantile Exchange (CME).

CME Lean Hogs option prices are quoted in dollars and cents per pound and their underlying futures are traded in lots of 40000 pounds (18 metric tons) of lean hogs.

Exchange & Product NameUnderlying Contract SizeExercise StyleOption Price Quotes
CME Lean Hogs Options40000 lb
(Full Contract Specs)

Call and Put Options

Options are divided into two classes - calls and puts. Lean Hogs call options are purchased by traders who are bullish about lean hogs prices. Traders who believe that lean hogs prices will fall can buy lean hogs put options instead.

Buying calls or puts is not the only way to trade options. Option selling is a popular strategy used by many professional option traders. More complex option trading strategies, also known as spreads, can also be constructed by simultaneously buying and selling options.

Lean Hogs Options vs. Lean Hogs Futures

Compared to the outright purchase of the underlying lean hogs futures, lean hogs options offer advantages such as additional leverage as well as the ability to limit potential losses. However, they are also wasting assets that has the potential to expire worthless.

Additional Leverage

Compared to taking a position on the underlying lean hogs futures outright, the buyer of a lean hogs option gains additional leverage since the premium payable is typically lower than the margin requirement needed to open a position in the underlying lean hogs futures.

Limit Potential Losses

As lean hogs options only grant the right but not the obligation to assume the underlying lean hogs futures position, potential losses are limited to only the premium paid to purchase the option.


Using options alone, or in combination with futures, a wide range of strategies can be implemented to cater to specific risk profile, investment time horizon, cost consideration and outlook on underlying volatility.

Time Decay

Options have a limited lifespan and are subjected to the effects of time decay. The value of a lean hogs option, specifically the time value, gets eroded away as time passes. However, since trading is a zero sum game, time decay can be turned into an ally if one choose to be a seller of options instead of buying them.

Learn More About Lean Hogs Futures & Options Trading

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