futures option

Futures option

Futures Option

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.

futures option

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.
References in periodicals archive ?
The impact of futures option introduction on their underlying instruments is not well understood.
11 December 2013 -- US exchange operator IntercontinentalExchange Group's (NYSE: ICE) London-based ICE Futures Europe subsidiary said it has completed the transition of ICE Brent futures options and related derivatives instruments to a new 'month-ahead' expiry calendar.
In this context, securities refers to a wide range of financial instruments, including securities, securities options, money market instruments, futures, and futures options.