Introduction to CBOT

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Introduction to CBOT Agricultural and Precious
MetalsIn cooperation with POLARIS MAN
FINANCIALTaipeiOctober 12, 2006
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CBOT Ags Precious MetalsAgenda

• General CBOT Overview
• Agricultural Complex
• E-Ag Side-by Side
• Statistics
• Contract Highlights
• Spreads
• Trading Information
• Precious Metals Complex
• Statistics
• Contract Highlights
• Benefits of CBOT Markets
• Assistance and Information

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2005 674.65 million
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Agricultural ComplexTrading Platforms

• Agricultural Futures
• Two platforms (open auction and e-cbot)
• Ag Futures Hours (Chicago time)
• 630 p.m. to 600 a.m. (e-cbot only)
• 930 a.m. to 115 p.m. (open auction and e-cbot)
• Side-by-side Since August 1, 2006
• Agricultural Options
• Two platforms (open auction and e-cbot)
• Ag option hours (Chicago time)
• 632 p.m. to 600 a.m. (e-cbot only)
• 930 a.m. to 115 p.m. (open auction only)
• Not traded side-by-side

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Agricultural Complex of Total Average Daily
Volume (ADV) by Platform(August 1 September
19, 2006)
Open Auction Electronic
Corn Futures 69.2 30.8
Soybean Futures 75.4 24.6
Wheat Futures 75.5 24.5
Soybean Oil Futures 86.9 13.1
Soybean Meal Futures 90.6 9.4
Oat Futures 86.7 13.3
Rough Rice Futures 82.2 17.8
Ethanol 0 100
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CBOT Agricultural ComplexAll Ag Products -
Average Daily Volume
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Agricultural Complex Ag Futures and Options
Volume
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Agricultural Complex Ag Futures and Options
Open Interest
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Agricultural Complex Average Daily Volume Growth

• Corn Average Daily Volume
• Jan August, 2006 versus Jan August 2005
• Up 44
• Wheat Average Daily Volume
• Jan August, 2006 versus Jan August, 2005
• Up 52

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Agricultural Complex Average Daily Volume (ADV)
Open Interest (OI)
ADV Aug 1 - Sep 19, 2006 OI September 19, 2006
Corn Futures 175,970 1,297,888
Soybean Futures 66,038 360,036
Wheat Futures 64,397 452,307
Soybean Oil Futures 33,061 264,723
Soybean Meal Futures 34,744 240,600
Oat Futures 1,122 11,425
Rough Rice Futures 1,454 13,914
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Agricultural Complex Volume and Open Interest
Records
Volume Open Interest
Corn Futures 371,918August 11, 2006 1,404,119July 28, 2006
Corn Options 101,607August 14, 2006 1,169,451August 24, 2006
Wheat Futures 157,446May 31, 2006 546,844 May 31, 2006
Wheat Options 35,240 April 30, 1996 250,103June 6, 2006
Soybean Futures 200,787 June 30, 2006 390,927 June 2, 2006
Soybean Options 74,602August 4, 1999 454,864June 23, 2005
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Agricultural Complex Corn Open Interest
Distribution September 19, 2006
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Agricultural Complex Agricultural Volatilities
August 2006
Commodity Volatility
Corn Futures 30.2
Wheat Futures 29.3
Soybean Futures 15.1
Soybean Oil Futures 20.7
Soybean Meal Futures 14.3
Oat Futures 19.4
Rough Rice Futures 35.3
Ethanol 30.2

• Historical Volatility is expressed as a
  percentage and is calculated by taking the
  standard deviation of the log-differences of the
  daily settlement prices of the underlying
  commodity over the course of the month. The
  result is multiplied by the square root of 252
  (the number of trading days in a year).

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Agricultural Complex Contract Highlights

• Corn, Wheat, Soybeans, S.A. Soybeans, Oats
• 5,000 bushels (bu)
• Tick ¼ cent (0.0025 12.50/per contract)
• Soybean Meal
• 100 short tons
• Tick 10 cent tick (0.10 10/contract)
• Soybean Oil
• 60,000 pounds
• Tick 1/100 cent (0.0001 6/contract)
• Rice
• 2,000 hundredweight (cwt)
• Tick ½ cent (0.005 10/contract)
• Ethanol
• 29,000 gallons (gal)
• Tick 1/10 of a cent (0.001 29/contract)

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Agricultural Complex Contract Highlights

• Contract Months
• Corn, Wheat, Oats Mar, May, Jul, Sep, Dec
• Soybeans, S.A. Soybeans Jan, Mar, May, Jul, Aug,
  Sep, Nov
• Soybean Meal Jan, Mar, May, Jul, Aug, Sep, Oct,
  Dec
• Soybean Oil Jan, Mar, May, Jul, Aug, Sep, Oct,
  Dec
• Rice Jan, Mar, May, Jul, Sep, Nov
• Ethanol All calendar months
• Contract Liquidity
• Like other complexes, the nearby Ag futures
  usually have a significant amount of volume and
  open interest
• Unlike other complexes, the deferred Ag futures
  also have a significant amount of volume and open
  interest
• Spreads are a major component of CBOT Ag markets

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Agricultural Complex Contract Highlights

• First position day
• Second to last business day of the month
  preceding the delivery month.
• Example June 29, 2006, is first position day for
  July 06 delivery
• To avoid possibility of delivery, the Long MUST
  offset their position prior to first position day
• Important Daily price limits are removed
  effective first position day
• Last trading day
• All ag futures except for Rice
• Business day prior to 15th calendar day
• Rice
• Seventh business day prior to the last business
  day of the delivery month
• Last delivery day
• Corn, Soybeans, S.A. Soybeans, SoyMeal, Wheat,
  Ethanol
• 2nd business day after last trading day of
  delivery month
• Rice, SoyOil
• Last business day of the delivery month Note
  Soyoil last delivery day will change to seventh
  business day following last trading day effective
  with the January 2007 contract
• Oats
• Seventh business day following last trading day
  of delivery month

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Agricultural Complex Contract Highlights

• All CBOT Grain and Oilseed Contracts Physical
  delivery
• Delivery 3-day Process
• Position day
• Second to last business day of the month prior to
  the delivery month
• Short (seller) gives notice to the clearing
  provider of its intent to deliver
• Notice day
• Last business day of the month prior to the
  delivery month
• Oldest Long (buyer) on record is matched to the
  Short making delivery
• Both the Long and Short are notified Long
  receives an invoice from the Short
• Delivery day
• First business day of delivery month
• Long makes payment to Short Short transfers
  delivery instrument to Long

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Agricultural Complex Spreads and Seasonality

• Old crop / New crop
• Distinguishes one growing season (past or
  current) from the next (current or future)
• Carry over reserves (ending stocks) from one crop
  year to the next crop year, also known as
  beginning stocks, are added to current year's
  production to determine supply. Primary old
  crop/new crop spreads
• Corn Jul vs. Dec
• Soybeans Jul vs. Nov
• Wheat Dec vs. Jul

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Agricultural Complex Spreads Carry

• Cost of carry
• Storage costs, insurance interest to hold
  physical commodity from one delivery month to the
  next.
• Reflected in the price difference between
  contract months.
• Full carry is a price differential that reflects
  the total cost.
• Normal ag markets reflect carry
• Ample supply
• Market wants grain to remain in storage.
• Ag markets are usually carry markets
• Ag markets are usually less than full carry.
• Inverted markets reflects
• Supply shortage
• Market needs grain to come out of storage

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Agricultural Complex Cost of Carry Calculation

• Formula
• days x (Interest rate/365 x Futures
  Price) .0015
• Example
• 30 days x (.055/365 x 6.00) .0015
  .072/bu/month
• Notes
• LIBOR 5.5
• CBOT Carrying Charges for Corn, Wheat and
  Soybeans .0015/bu/day
• August Soybean Futures 6.00/bushel

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Agricultural Complex Common Spreads

• Intra-market spreads
• Calendar or inter-delivery
• Reflect the cost of carry between contract months
  of the same commodity.
• Examples
• Corn Mar/May May/July July/Dec
• Soybeans Jan/Mar Mar/July July/Nov
• Wheat Mar/May May/Jul Dec/July

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Agricultural Complex Common Spreads

• Inter-market spreads
• Reflect the relationship between the same
  commodities from different exchanges
• CBOT vs. KCBOT
• CBOT vs. MGEX
• Note Soft red winter wheat, which is the primary
  delivery class for the CBOT Wheat futures, has
  the lowest world production numbers but the CBOT
  futures volume is greater than all of the Wheat
  futures markets in the world combined.WHY????
• CBOT Liquidity

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Agricultural Complex Common Spreads

• Inter-commodity spreads
• Reflect the relationship between different but
  related commodities
• Relationships usually reflect substitutability
• Examples
• Corn vs. Wheat
• Corn vs. Soybeans
• Corn vs. Hogs

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Agricultural Complex Common Spreads

• Commodity-Product spreads
• Reflect the relationship between a raw product
  and the processed products or by-products
• Relationships usually reflect substitutability
• Examples
• Soybean Crush
• Buy Soybeans, Sell SoyMeal, Sell SoyOil
• 1 to 1 ratio or 10 Beans, 11 Meal, 9 oil ratio
• Fundamentals can change dramatically depending on
  whether Beans are being crushed for meal or oil
  demand
• Reverse Soybean Crush
• Sell Soybeans, Buy SoyMeal, Buy SoyOil

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Agricultural Complex Trading Information
Resources

• Numbers and news that may impact ag prices
• USDA, CFTC and CBOT reports
• Key reports can be accessed through
• www.cbot.com gt Market Data gt Reports gt Ag
  Fundamental Reports
• Examples from the above url
• Periodic Reports
• Fundamental Reference
• Supply Charts
• Demand Charts

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Agricultural Complex Trading Information
Resources

• Agricultural Homepage
• www.cbot.com gt Products gt Agricultural
• Tutorials, Webinars and Publications
• www.cbot.com gt Education gt Tutorials, Webinars,
  Publications
• Position limits
• www.cbot.com gt About CBOT gt Rules Regulations gt
  4C
• Margins
• www.cbot.com gt Clearing gt Margins

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Agricultural Complex Trading Information
Resources

• Ticker Symbols, Trading Hours Clearing Codes
• www.cbot.com gt Education gt Trading Hours and
  Symbols
• Exchange Transactions Fees
• www.cbot.com gt Clearing gt Exchange Transaction
  and Clearing Fees
• Commodity News For Tomorrow 
• Daily commodity publication
• Provided by the CBOT in partnership with Dow
  Jones Newswires
• www.cbot.com gt Market Data gt Commodity News for
  Tomorrow

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Agricultural Futures Ticker Symbols and Hours
Commodity Open Auction Ticker Symbol Hours Electronic Ticker Symbol Hours
Corn Futures (C) 930 am 115 pm (ZC) 630 pm 600 am and 930 am 115 pm
Wheat Futures (W) 930 am 115 pm (ZW) 632 pm 600 am and 930 am 115 pm
Soybean Futures (S) 930 am 115 pm (ZS) 631 pm 600 am and 930 am 115 pm
Soybean Meal (SM) 930 am 115 pm (ZM) 631 pm 600 am and 930 am 115 pm
Soybean Oil Futures (BO) 930 am 115 pm (ZL) 631 pm 600 am and 930 am 115 pm
S. American Soybean Futures (BS) 900 am 115 pm (ZK) 631 pm 600 am and 900 am 115 pm
Oat Futures (O) 930 am 115 pm (ZO) 633 pm 600 am and 930 am 115 pm
Rough Rice Futures (RR) 930 am 115 pm (ZR) 633 pm 600 am and 930 am 115 pm
Ethanol Futures (AC) 930 am 115 pm (ZE) 636 pm 600 am and 930 am 115 pm
CBOT mini-sized Corn Futures (YC) 930 am 145 pm n/a
CBOT mini-sized Wheat Futures (YW) 930 am 145 pm n/a
CBOT mini-sized Soybean Futures (YK) 930 am 145 pm n/a
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Agricultural Options Trading Symbols and Hours
Commodity Open Auction Ticker Symbol Hours ELECTRONIC Ticker Symbol Hours
Corn Calls (CY) 930 am 115 pm (OZCC) 632 pm 600 am
Corn Puts (PY) 930 am 115 pm (OZCP) 632 pm 600 am
Wheat Calls (WY) 930 am 115 pm (OZWC) 634 pm 600 am
Wheat Puts (WZ) 930 am 115 pm (OZWP) 634 pm 600 am
Soybean Calls (CZ) 930 am 115 pm (OZSC) 633 pm 600 am
Soybean Puts (PZ) 930 am 115 pm (OZSP) 633 pm 600 am
Soybean Meal Calls (MY) 930 am 115 pm (OZMC) 633 pm 600 am
Soybean Meal Puts (MZ) 930 am 115 pm (OZMP) 633 pm 600 am
Soybean Oil Calls (OY) 930 am 115 pm (OZLC) 633 pm 600 am
Soybean Oil Puts (OZ) 930 am 115 pm (OZLP) 633 pm 600 am
Soybean Crush Calls (BC) 930 am 115 pm n/a
Soybean Crush Puts (BP) 930 am 115 pm n/a
Oat Calls (OO) 930 am 115 pm (OZOC) 635 pm 600 am
Oat Puts (OV) 930 am 115 pm (OZOP) 635 pm 600 am
Rough Rice Calls (RRC) 930 am 115 pm (OZRC) 635 pm 600 am
Rough Rice Puts (RRP) 930 am 115 pm (OZRP) 635 pm 600 am
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Agricultural Complex Trading Hour Highlights

• Important Notes
• Only Ag Futures are traded side-by-side
• Ag Options are available on the electronic
  platform only over night
• All CBOT Ag Futures close at NOON on last trading
  day
• Modified close only available in Open Auction
  (123 pm - 125 pm)
• Both trading platforms settled to Open Auction
  Settlement Prices
• All times listed in tables are based on Chicago
  time

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Precious Metals Complex Average Daily Volume
(ADV) Open Interest (OI)
ADV August 22 - September 19, 2006 OI September 19, 2006
100 oz. Gold Futures 41,201 40,925
100 oz. Gold Options 676 3,993
33.2 oz. Gold Futures 7,086 7,276
5,000 oz. Silver Futures 7,482 9,607
5,000 oz. Silver Options 13 49
1,000 oz. Silver Futures 2,039 4,290
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Precious Metals Complex Volume and Open
Interest Records
Volume Open Interest
100 oz. Gold Futures 69,432 September 11, 2006 40,925 September 19, 2006
100 oz. Gold Options 5,471 May 11, 2006 14,364 May 18, 2006
33.2 oz. Gold Futures 28,018 May 17, 2006 9,059 May 15, 2006
5,000 oz. Silver Futures 12,560 April 20, 2006 9,836 September 15, 2006
5,000 oz. Silver Options 55 July 7, 2006 183 August 25, 2006
1,000 oz. Silver Futures 12,413 April 20, 2006 12,730 May 15, 2006
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Precious Metals Complex Gold Futures Contract
Highlights

• Contract size 100 ounces (oz.)
• Price quote Dollars and cents per ounce (oz.)
• Tick size 10 cents (0.10)/oz. (10/contract)
• Months First 3 months 2 Feb, 2 Apr, 5 Jun, 2
  Aug 2 Oct 5 Dec
• Last trading day Third to last business day of
  delivery month
• Last delivery day Last business day of the month
• Trading Platform 100 Electronic
• Ticker symbol ZG
• Trading hours 616 p.m. 400 p.m. Chicago
  time (Sun Fri)
• Last trading day Expiring contracts close at
  1230 p.m. Chicago time

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Precious Metals Complex Gold Options Contract
Highlights

• Contract size 1 CBOT 100 ounces (oz.) Gold
  futures contract
• Price quote Dollars and cents per ounce (oz.)
• Tick size 10 cents (0.10)/oz. (10/contract)
• Standard Months Feb, Apr, Jun, Aug, Oct, Dec
• Serial Months Jan, Mar, May, Jul, Sep, Nov
• Last trading day Third to last business day of
  delivery month
• Last delivery day Last business day of the month
• Trading Platform Electronic and Open Auction
• Ticker symbol
• Electronic OZGC (calls) and OZGP (puts)
• Open Auction ZGC (calls) and ZGP (puts)
• Trading hours
• Electronic 618 p.m. 400 p.m. Chicago time
  (Sun Fri)
• Open Auction TBD (Mon Fri)
• Last trading day Expiring contracts close at
  1230 p.m. Chicago time

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Precious Metals Complex CBOT mini-sized Gold
Futures Contract Highlights

• Contract size 33.2 ounces (oz.)
• Price quote Dollars and cents per ounce
• Tick size 10 cents (0.10)/oz. (3.32/contract)
• Months First 3 months 2 Feb, 2 Apr, 5 Jun, 2
  Aug, 2 Oct, 5 Dec
• Last trading day Third to last business day of
  delivery month
• Last delivery day Last business day of the month
• Trading Platform 100 Electronic
• Ticker symbol YG
• Trading hours 616 p.m. 400 p.m. Chicago
  time (Sun Fri)
• Last trading day Expiring contracts close at
  1230 p.m. Chicago time

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Precious Metals Complex Silver Futures Contract
Highlights

• Contract size 5,000 ounces (oz.)
• Price quote Dollars and cents per ounce (oz.)
• Tick size 1/10 cent (0.001)/oz. (5/contract)
• Months First 3 months 2 Jan, 2 Mar, 2 May, 5
  Jul, 2 Sep 5 Dec
• Last trading day Third to last business day of
  delivery month
• Last delivery day Last business day of the month
• Trading Platform 100 Electronic
• Ticker symbol ZI
• Trading hours 616 p.m. 400 p.m. Chicago
  time (Sun Fri)
• Last trading day Expiring contracts close at
  1225 p.m. Chicago time

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Precious Metals Complex Silver Options Contract
Highlights

• Contract size One 5,000 ounce (oz.) Silver
  futures contract
• Price quote Dollars and cents per ounce (oz.)
• Tick size 1/10 cent (0.001)/oz. (5/contract)
• Standard months Mar, May, Jul, Sep Dec
• Serial months Jan, Feb, Apr, Jun, Aug, Oct Nov
• Last trading day Third to last business day of
  delivery month
• Last delivery day Last business day of the month
• Trading Platform Electronic and Open Auction
• Ticker symbol
• Electronic OZIC (calls) and OZIP (puts)
• Open Auction ZIC (calls) and ZIP (puts)
• Trading hours
• Electronic 618 p.m. 400 p.m. Chicago time
  (Sun Fri)
• Open auction TBD (Mon Fri)
• Last trading day Expiring contracts close at
  1225 p.m. Chicago time

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Precious Metals Complex CBOT mini-sized Silver
Futures Contract Highlights

• Contract size 1,000 ounces (oz.)
• Price quote Dollars and cents per ounce
• Tick size 1/10 cent (0.001)/oz. (1/contract)
• Months First 3 months 2 Jan, 2 Mar, 2 May, 5
  Jul, 2 Sep 5 Dec
• Last trading day Third to last business day of
  delivery month
• Last delivery day Last business day of the month
• Trading Platform 100 Electronic
• Ticker symbol YI
• Trading hours 616 p.m. 400 p.m. Chicago
  time (Sun Fri)
• Last trading day Expiring contracts close at
  1225 p.m. Chicago time

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Precious Metals ComplexUseful Links

• Metals Complex Homepage
• www.cbot.com/metals
• Chart Book
• Live Books
• Futures
• Options

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Precious Metals ComplexFutures and Options Live
Books
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e-CBOT Highlights

• Over 40 Recognized Strategies
• Futures and Options
• Points of Presence (POPS)
• 13 POPS routes orders directly to the host
• Located in Chicago, Amsterdam, Gibraltar, London,
  New York, Paris, Singapore
• 262 direct connections

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CBOT MarketsBenefits

• Liquidity
• Financial integrity
• Transparency
• Innovative
• Variety
• Ag, Metals, Financial, Equity Energy Complexes
• Futures and Options
• Customer Service Customer Friendly Customer
  Choice
• Two trading platforms one pool of liquidity
• Electronic Straight thru processing
• Open auction Side by side technology
• Accessibility
• Metals trading day 22 hours (Sunday night
  Friday afternoon)
• Ags trading day 15.25 hour (Sunday night
  Friday afternoon)

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CBOT Ags Precious Metals Assistance

• Electronic Trading Issues
• Market Operations 312-347-4600
• Electronic Platform Connectivity Issues
  
• Functional Member Readiness 312-341-7955
• Product Issues
• Business Development 312-341-7955

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CBOT Disclaimer

• The information herein is taken from sources
  believed to be reliable. However, it is intended
  for purposes of information and education only
  and is not guaranteed by the Chicago Board of
  Trade as to accuracy, completeness, nor any
  trading result and does not constitute trading
  advice or constitute a solicitation of the
  purchase or sale of any futures or options. The
  Rules and Regulations of the Chicago Board of
  Trade should be consulted as the authoritative
  source on all current contract specifications and
  regulations.