Options on Futures

Options on Futures

Options on futures are derivatives contracts that confer a right but not an obligation on a trader to go long (buy) or go short (sell) a futures contract at a specified price on or before a specified date. At exercise, an option on a future will not deliver the physical underlying (in the case of a commodity contract) or a financial instrument (in the case of a bond or equity contract) but a futures contract.

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