Rapeseed call options give a buyer exposure to rising futures prices. Follow one contract from premium paid to its result at expiration.
How rapeseed options work
The examples use options on rapeseed futures. A call gives the right to enter a long futures position at the strike price. A put gives the right to enter a short futures position at that price.
A European crusher may buy rapeseed calls to help protect input costs. Canadian canola is a related but separate benchmark.
The cost of one option
One Euronext Paris contract represents 50 tonnes. At a premium of €20 per tonne, one option costs €1,000 (€20 × 50).
Assume the futures price and strike are both €450 per tonne. The call and put premiums are each €20 for comparison, not current quotes. Results below are at expiration, before fees, with any futures position from exercise immediately closed at the stated price.
Buying rapeseed calls
Suppose you expect rapeseed prices to rise and buy one €450 call for €1,000.
If the underlying future reaches €510 per tonne at expiration, buying at €450 gives an advantage of €60 per tonne. Across 50 units, that is €3,000. After the premium, your net profit is €2,000.
At €450 or below, the call expires worthless and the loss is €1,000. Breakeven is €470 per tonne: strike plus premium. At €460, the call has value but still loses €500 after its cost.
Before expiration
An option can be sold to close before expiration when a market is available. Its price then includes the effect of remaining time and implied volatility, so an earlier trade need not break even at the expiration price calculated above.
The purchased option can lose its whole premium. Exercise can create a futures position requiring margin and exposing you to further gains or losses. An uncovered seller can lose more than the premium received.
Rapeseed price chart
EURONEXT rapeseed futures. A continuous futures chart joins contract months; it is not an individual expiry. Check the displayed quotation and timestamp.
