Risk of American Options Being Exercised Early

[kmoney]

I know for stock options there can be an advantage to exercising options before a dividend.

Is there any reason a trader would exercise commodity futures options early? The only reason I can think of is if interest rates became negative.

Thanks for the help.

 

[Robert Morse]

Is there any reason a trader would exercise commodity futures options early? T

Assuming you can, no. Most do not allow that,

 

[sle]

Is there any reason a trader would exercise commodity futures options early?

Assuming your American option delivers a futures contract after exercise and your option (either call or put) is deep ITM, you might want to early exercise once the funding costs exceed whatever value of optionality is left.

 

[kmoney]

Thanks for the answer.