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+680 Part V: Index Options and Futures 
+Similar situations can also occur on the downside, where, if the future has traded as 
+low as it can go, it is said to be "limit offered." 
+As was pointed out earlier, futures options sometimes have trading limits 
+imposed on them as well. This limit is of the same magnitude as the futures limit. 
+Most of these are on the Chicago Board of Trade (all grains, U.S. Treasury bonds, 
+Municipal Bond Index, Nikkei stock index, and silver), although currency options on 
+the Chicago Mere are included as well. In other markets, options are free to trade, 
+even though futures have effectively halted because they are up or down the limit. 
+However, even in the situations in which futures options themselves have a trading 
+limit, there may be out-of-the-money options available for trading that have not 
+reached their trading limit. 
+When options are still trading, one can use them to imply the price at which the 
+futures would be trading, were they not at their trading limit. 
+Example: August soybeans have been inflated in price due to drought fears, having 
+closed on Friday at 650 ($6.50 per bushel). However, over the weekend it rains heav­
+ily in the Midwest, and it appears that the drought fears were overblown. Soybeans 
+open down 30 cents, to 620, down the allowable 30-cent limit. Furthermore, there 
+are no buyers at that level and the August bean contract is locked limit down. No fur­
+ther trading ensues. 
+One may be able to use the August soybean options as a price discovery mech­
+anism to see where August soybeans would be trading if they were open. 
+Suppose that the following prices exist, even though August soybeans are not 
+trading because they are locked limit down: 
+Lost Sole Net Change 
+Option Price for the Day 
+August 625 call 19 - 21 
+August 625 put 31 +16 
+An option strategist knows that synthetic long futures can be created by buying 
+a call and selling a put, or vice versa for short futures. Knowing this, one can tell what 
+price futures are projected to be trading at: 
+Implied Futures Price = Strike Price + Call Price - Put Price 
+= 625 + 19 - 31 = 613 
+With these options at the prices shown, one can create a synthetic futures posi­
+tion at a price of 613. Therefore, the implied price for August soybean futures in this 
+example is 613.