futures option

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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 ?
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.
London, United Kingdom, November 17, 2012 --(PR.com)-- In line with the London Multi Commodities Exchange's traditional service of providing low-cost commodity futures trades, US traders can now trade futures and futures options through its simplified and reduced-fee commission structure.
Previously, he was a senior vice president for Futures Marketing and Product Development at Greenwich Capital, head of Implementation Strategy at Merrill Lynch Direct Markets' Technology Division, and has been with Financial Futures Options Group at Merrill Lynch (NYSE: BAC) leading the Global Futures Marketing and Clearing Sales team.
GMI has been customised to support futures, futures options, stock futures, equity options, Contracts for Differences, foreign exchange and dividends listed instruments in the Middle East.
GMI has been customised to support futures, futures options, stock futures, equity options, Contracts for Differences (CFDs), foreign exchange and dividends listed instruments in the Middle East.
Bates, 1996, "Dollar Jump Fears, 1984-1992--Distributional Abnormalities Implicit in Currency Futures Options", Journal of International Money and Finance, 15:65-93
The TSE suspended trading in all five types of derivatives -- stock index futures and options, stock certificate options, bond futures and bond futures options -- when a computer problem disabled telecommunications between the bourse and 204 financial institutions including banks and brokerages.
Currently futures options are traded on many agricultural, financial, currency and stock index futures.
The second predictor variable in the regression, lagged index price changes, is expected to be largely unaffected by the introduction of index futures options. The basis of this hypothesis is that, although option introduction may increase the efficiency of the underlying assets, in the case of futures options the asset directly underlying the futures option contract is a futures contract on the stock index and not the index itself.
This study examined the impact of index futures options on the predictability of intraday index price changes by examining the MMI futures contract.
(In this context, securities refers to a wide range of financial instruments, including securities, securities options, money market instruments, futures, and futures options.) The paper was first prepared for a December 1990 meeting of the Committee on Payment and Settlement Systems of the Central Banks of the Group of Ten Countries, and the framework it presents builds on an analysis of netting and settlement systems by the Committee on Interbank Netting Schemes of that group.
Yung, 1989, "Trader Rationality in the Exercise of Futures Options", Journal of Financial Economics, 23:339-361