can u exercise an option on a future

Q

qwert

can u exercise an option on a future and receive a future contract. with wheat options, i think the dec future expires before the jan future option. so r futures contracts created when the jan futures options r exercised? just like to know because there isnt any volume on futures options deep in the money.

what if i bought a google option and didnt have enough money to purchase a 100 shares to exercise the option?
 
Quote from qwert:
----Can you exercise an option on a futures contract and receive a futures contract with wheat options?
----Are futures contracts created when the January futures options are exercised?
----What if I bought a google call-option and did not have enough money to purchase 100 shares to exercise the option?
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1) Yes
2) Yes. The option contract is replaced by a futures contract.
3) Your brokerage firm will offset the option unless you deposit sufficient money in your account to puchase the shares at the strike price, plus commissions and other fees. :cool:
 
Quote from qwert:


what if i bought a google option and didnt have enough money to purchase a 100 shares to exercise the option?
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You can short the stock, if it's shortable, and then exercise your call option.
 
Quote from Vinny1:You can short the stock, if it's shortable, and then exercise your call option.
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If you don't have enough margin to buy 100 stocks, it's unlikely you have margin for shorting 100
 
Quote from qwert:

can u exercise an option on a future and receive a future contract. with wheat options, i think the dec future expires before the jan future option. so r futures contracts created when the jan futures options r exercised? just like to know because there isnt any volume on futures options deep in the money.

what if i bought a google option and didnt have enough money to purchase a 100 shares to exercise the option?
More...

As others have already pointed out, yes, you can exercise an option into a futures contract. Options are always exercised into the next available futures contract, so for example, if there is a Dec futures contract and a Mar contract then Dec options would be exercised into Dec futures, while Jan, Feb and Mar options would be exercised into Mar futures contract.

If you exercise an option and you don't have enough money to meet the margin requirement for the position then you would be issued a margin call and you would have to either put in more money or close out the position. However, be careful, some brokers issue a margin call and then give you a day or two to comply, while others may start automatically liquidating your positions the instant you get a margin call without giving you a chance to respond.
 
thanks for the replies. any plain worded books on futures trading worth reading taking about basics of futures trading
 
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