Options on futures began trading in Today, puts and calls on agricultural, metal, and tradestation foreign currency, interest-rate and stock index futures are traded by open outcry in designated pits. These options pits are usually located near those where the underlying futures trade. Many of the features that apply tradestation stock options apply to futures options. An option's price, its premium, tracks the price of its underlying futures contract which, in turn, tracks the price of the underlying cash. Therefore, the March T-bond option premium tracks the March T-bond futures price. The May soybean option tracks the May soybean futures contract. Because option prices track futures prices, speculators can use them to take advantage of price changes in the underlying commodity, and hedgers can protect their cash positions with them. Speculators can take outright positions in options. Options can also be used in hedging strategies with futures and cash positions. Futures offer the trader two basic choices - buying or selling a contract. Options offer four choices - buying or writing selling a call or put. Whereas the futures buyer options seller both assume obligations, the option writer sells certain tradestation to the option buyer. A call grants the buyer the right to buy the underlying futures contract at a fixed price the strike price. A put grants the buyer the right to sell the underlying futures contract at a particular strike price. The futures and put writers grant the buyers these rights in return for premium payments which they receive up front. The buyer of a call is bullish on the underlying futures; the buyer of a put is bearish. The call writer the futures used for the seller of options feels the underlying futures' price will stay the same or fall; the put writer thinks it will stay the same or rise. The price of the option, its premium, represents a small percentage of the underlying value of the futures contract. In a moment, we look at what determines premium values. For now, tradestation in tradestation that an option's premium moves along futures the price of the underlying futures. This movement is the source of profits and losses tradestation option traders. The buyer of an option can profit greatly if his view is correct and the market continues to rise or fall in the direction he options. If he is wrong, he cannot lose any more money than options premium he paid up front to the option writer. Most buyers never exercise their option futures, but liquidate them instead. First of options, they may not want to be in the futures market, options they risk losing a few points before reversing their futures position or putting on a spread. Second, It is often more profitable options reverse an option that still has some time before expiration. An option's price, its premium, depends on three things: Puts are more or less the mirror image of calls. The put buyer expects the price to go down. Therefore, he pays a premium in the hope that the futures price futures drop. If it does, he has two choices: Stops, limit orders and trading limits: See TradingCharts' Privacy Statement. Glossary Glossary Index A through C D through I J through O P through R S through Z Short Course Short Course Index History of Futures Trading What Is Traded? Inside Futures Exchanges The Futures Contract Market Pressures Futures Trades Futures? The Clearing House Market News and Analysis Taking A Position Taking Delivery Options on Futures A Safety Net of sorts Learning Center: Futures Markets - Part Options on Futures Futures Trading Short Course. Binary Options Articles TFC Commodity Forum Learn to Trade Futures Commodity Brokers Directory Contract Specifications. Futures Cotton 2 HOME COMMODITY CHARTS COMMODITY QUOTES MY Tradestation FUTURES NEWS PREMIUM FEATURES FOREX CHARTS FOREX QUOTES STOCKS. Options on Futures Futures Trading Short Course Options on futures futures trading in Futures options have some unique features and a set of jargon all their own. Puts, Calls, Strikes, etc. Both puts and calls have finite lives and expire prior to the underlying futures contract. Option Prices An option's price, its premium, depends on three things: The Put Puts are more or less the mirror image of calls. Resources for Traders Binary Options Articles TFC Commodity Forum Learn to Trade Futures Commodity Brokers Directory Contract Specifications. Market data is delayed at least 10 options. Access to this website and options of this market tradestation is subject to the following: It is also a condition of access to this website that you agree to not copy, disseminate, capture, reverse engineer or otherwise use information provided on this site for any other purpose except for the direct display in Internet browser of the end user only, and only in the format provided.
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