I'm researching into trading ES futures. I have a quick question about the exercise.

[frostydc4]

I'm looking into swing trading ES, CL, and ZN futures. This is appealing to me since they trade roundclock and the margin is lower. They are very liquid during RTH as well. I understand that this is a hedge market but I will be using this to made directional trades. I will be long the options (I do not plan on writing options & I know time decay will eat me alive). This question may seem redundant but I couldn't find a clear answer by searching previous threads. If I am long an option is there a chance that it can be exercised before the option's last trading day (meaning if I buy an option today is there a chance I can wake up the next morning with the underlying futures contract)? Just curious, how many of you make directional trades using the futures options (or do you use it for hedging)?



Thanks

 

[TheGoonior]

Quote from frostydc4:

I will be long the options (I do not plan on writing options & I know time decay will eat me alive)...If I am long an option is there a chance that it can be exercised before the option's last trading day (meaning if I buy an option today is there a chance I can wake up the next morning with the underlying futures contract)?

The buyer of an option is the one who determines if the option is exercised, so if you are long the option, then it is up to you to exercise them (can also occur if you let them expire and they are ITM).

 

[weewilly]

The "exercise style" is what you need to know. "American" style exercise means you, the buyer of the option, can exercise anytime. "European" style exercise means you can only exercise on the last trading day. The ones you mentioned (see below) are all american style.

E-Mini S&P 500 Options
10-Year U.S. Treasury Note Options
Light Sweet Crude Oil Options

Oh and trading these instruments is not easy -- at all. Good luck to you.

 

[RiceRocket]

Trading a derivative of a derivative is such a horrible waste of money. If you want to trade the eminis, just trade the futures contract. Stay away from the options.