This chapter covers options on futures. The buyer holds a right and pays a premium; the writer holds an obligation and posts margin. The strategy units apply that asymmetry to hedging, speculation, and spreads.
What You'll Learn
| Unit | Focus |
|---|---|
| Option Theory | Long and short options, premium, payoff, and margin |
| Option Hedge Strategies | Long puts for sellers and long calls for buyers |
| Option Speculative Strategies | Limited-risk substitutes and synthetic positions |
| Option Spread Strategies | Vertical, calendar, and arbitrage spreads |
Chapter Strategy
Start every options problem by identifying the underlying futures position created at exercise. Then separate the option payoff from the cash-market position. An option hedge can set a futures-price-equivalent floor or ceiling, but the actual cash result can still change with basis.