After a record 1991, Chicago Board of Trade wheat options volume has continued to explode in 1992 because of broad-based participation inspired by overwhelmingly bullish fundamentals, options traders said.

Open interest in wheat options has been setting records almost daily since early January. At times, it has even outstripped the open interest in the futures pit.On Monday, wheat options' open interest soared to 91,394 contracts, or 456,970,000 bushels, the highest it has been all year. Futures' open interest Monday was only 340,270,000 bushels.

The options surge began in midsummer 1991 as extremely bullish fundamentals emerged for the 1992 wheat crop. These included dry weather concerns, a steady decline in ending stocks and a consistently aggressive U.S. export sales program.

Those factors helped propel options trading to record levels for the year as futures crested to new contract highs repeatedly. In 1991, wheat options volume reached a record at 692,327 contracts, compared with 1990's 482,941, according to CBT records.

Options contracts have gained in popularity because they give the user much more flexibility. They generally are less risky than an outright futures position because they require the user to risk only a one-time premium. Holders of long or short futures positions are liable for margin calls as long as those positions remain open.

The wave of options interest continued this year after the USDA released a much lower-than-expected 1992 U.S. winter wheat estimate and further slashed its 1991-92 ending stocks estimate.

On Jan. 13 the USDA pegged U.S. ending stocks for 1991-92 at 390 million bushels, the lowest level in 18 years. the USDA earlier in the month estimated 1992 winter wheat seedings at 50.215 million acres, sharply below trade forecasts for 54.05 million.

The stocks drawdown and the potential for decreased production this year

because of the acreage cut have magnified the bullish impact of active U.S. wheat export sales via the export bonus program. Prospects for more sales soon to the Commonwealth of Independent States, the former U.S.S.R., have driven futures to a series of contract highs.

Volume in wheat options has risen to 7,000 to 9,000 contracts in the past two to three weeks. That compares with daily averages during recent years of 1,000 to 2,000 contracts, a cash-connected trader said. "We used to consider it a good day if wheat options' daily volume hit 4,000 contracts," he said.

Commercial firms and commission houses have been mainly featured in bullish plays, such as buying March calls and selling March puts. An options purchaser is given the right, but not the obligation, to go long or short futures.

Floor trade in options also has escalated. Locals have been selling the calls, while commercial and commission house activity centered on call purchases.

But traders said the wheat options surge could be peaking. Emphasis has begun to shift from old-crop months to new-crop months, so players in March will begin rolling positions out of that month or leaving the market, they said. Roughly 60 percent of total open interest is being held in March, they said, and liquidation could begin trimming daily figures.

However, wheat options could be in for another eruption if the weather starts to appear unfavorable for the 1992 wheat crop when it starts to emerge out of dormancy in the spring or if other bullish factors emerge, such as aggressive Commonwealth buying.