What are "options on futures"?

C

contactkeval

Hi All,

How can I check if the option is on futures/etf/index/stock? This is a newbie question and any information/reference is highly appreciated.

Thanks!
 
contactkeval said:
Hi All,

How can I check if the option is on futures/etf/index/stock? This is a newbie question and any information/reference is highly appreciated.

Thanks!
More...

"Options on Futures" is a difficult game to play. Futures are a leveraged vehicle on an index or stock. Options on Futures are a leveraged vehicle on THAT... with "expectations" built into the price. Premiums are likely to be especially large so that you need to catch a BIG move just to keep your options from expiring worthless. Not a game for "hungry to get rich" rookies/amateurs.
 
Scataphagos said:
"Options on Futures" is a difficult game to play. Futures are a leveraged vehicle on an index or stock. Options on Futures are a leveraged vehicle on THAT... with "expectations" built into the price. Premiums are likely to be especially large so that you need to catch a BIG move just to keep your options from expiring worthless. Not a game for "hungry to get rich" rookies/amateurs.
More...

The leverage on futures doesn't really play into options on futures though, does it? If you trade futures without margin, there is no leverage. You can't usually trade options on leverage (although the leverage is built in.)
 
Scataphagos said:
"Options on Futures" is a difficult game to play. Futures are a leveraged vehicle on an index or stock. Options on Futures are a leveraged vehicle on THAT... with "expectations" built into the price. Premiums are likely to be especially large so that you need to catch a BIG move just to keep your options from expiring worthless. Not a game for "hungry to get rich" rookies/amateurs.
More...

Not necessarily true. In a way, options on futures are simpler because there's no "devops" complexity for handling dividends.
 
Thank you MACD. Options on equities are very simple. In most cases they are for 100 Shares and every month is based on the same symbol. In the USA, equity options are all American Style, and the delivery are shares of stock. (Yes, I know that cash settled indexes are different) Options on futures require research and understanding. Each future has its own multiplier. I.E Silver is for $5000/point, Gold is $100/Point, Crude is $1000/point, ES is $50/point etc. That means that a $1.00 call option on each has a different value as you must multiply those times the size of the base future. In addition, each month can have a different future that can trade at different value than the front month. I suggest the CME education is a great place to start.

MACD said:
As usual @Robert Morse provides the BEST answers. Bravo ----->
More...
 
Last edited:
Robert Morse said:
Thank you MACD. Options on equities are very simple. In most cases they are for 100 Shares and every month is based on the same symbol. In the USA, equity options are all American Style, and the delivery are shares of stock. (Yes, I know that cash settled indexes are different) Options on futures require research and understanding. Each future has its own multiplier. I.E Silver is for $5000/point, Gold is $100/Point, Crude is $1000/point, ES is $50/point etc. That means that a $1.00 call option on each has a different value as you have to multiply those times the size of the base future. In addition each month can have a different future that can trade at different value than the front month. I suggest the CME education is a great place to start.
More...

Come on, OMM.

You gotta' just get to the meat of the matter. The CME is the ultimate self-promoter. :-)



https://www.cmegroup.com/education/courses/introduction-to-options/options-on-futures-vs-etfs.html
 
You must log in or register to reply here.
Back
Top