futures option(redirected from Futures Options)
A contract giving the holder the right (but not the obligation) to buy (if a call) or sell (if a put) a futures contract. In other words, the underlying asset of a futures option is a futures contract (which itself has a separate underlying asset). A futures option may be useful if it is not readily apparent whether taking a certain futures position would be beneficial to one's investment strategy.
A put or call option on a futures contract. Because of the price volatility of futures contracts, options on these contracts are high-risk investments. See also Section 1256 contracts.