The Chicago Board of Trade today announced that open interest in its Binary options on the Target Federal Funds Rate contract exceeded 20,000 contracts on Wednesday, February 7. The new open interest record, 20,798 contracts, tops the previous record of 19,357 contracts set on September 19, 2006.


Open interest represents the number of trading positions that have not yet been offset and closed at the end of a trading day and is considered by many to reflect the vibrancy of a market.

The Target Federal Funds Rate is set by the United States Federal Reserve, typically at its Federal Open Market Committee (FOMC) meetings.

CBOT Senior Vice President of Business Development Robert D. Ray said, “In light of the recent FOMC meeting, surpassing the 20,000-contract mark in open interest demonstrates customers are continuing to embrace Binary options on the Target Fed Funds Rate. Five of the contract’s top 10 volume days have already taken place in 2007. We believe CBOT market participants view Binary options on the Target Federal Funds Rate as an effective way to trade exposure to the Fed’s Target Rate and as a risk management tool through the increasing number of open positions.”

At expiration, Binary options have two possible outcomes – final settlement is either a fixed dollar amount or nothing at all. When the options expire, “in the money” options pay $1,000 to option holders, while those that are “at the money,” or “out of the money” pay holders zero.

Strike prices correspond to the Target Federal Funds rate using a formula of 100-minus the actual Target rate – they are cash-settled and based upon the most recent Target rate level. For more information, visit the Binary Options section on cbot.com