Options on emini S&P

T

trader60611

Interactive brokers says:

odd month options on emini convert to a front month futures contracts at expiration

front month options contracts "convert to cash" at expiration.

Here is my question. I want to buy a feb or mar 1000 put on emini (obviously out of the money). I am perfectly happy if it expires worthless...but why would I buy an option that could actually expire "less than worhless"? Should I anticipate this possibility?

Thank you for any clarifications. I am especially hoping someone who has actually been through an emini options expiration would reply.

Manny
 
if your analysis was correct the options for that 'off' month would behave like underlying futures contracts rather than like options.... that can't be. So, what must be the case is that the stated policy which you referenced above must only apply to ITM options...which are the only options that anyone cares about at expiration.
 
If you BUY an option, it can only depreciate to zero. You cannot lose more than you pay for the contract.
 
Makes sense to me. I assume I would also lose the premium in addition to the market value of the option(s) if it expired out of the money?
 
Quote from trader60611:

Makes sense to me. I assume I would also lose the premium in addition to the market value of the option(s) if it expired out of the money?
More...

Buying a put, gives you the right (but not an obligation) to sell the contract's underlying. So all you could lose is the premium you initially paid. The market value just dictates whether you'd want to exercize your option or not. Now if you sold a put that would be different :D
 
Instead of options on futures you might consider

- Options on S&P500 Index ('SPX')
- Options on S&P500 ETF ('SPY')

Select options from underlying symbols SPX and/or SPY.
 
Assuming I wish to let the Put option expire out of the money, I can then ignore the "open position P/L" field regarding the change in option value since I purchased it? It will just "go away" upon exipiration? I will be only be "out" the premium. They will not "sell" the option at its liquidation value for me?
 
You must log in or register to reply here.
Back
Top