Selling a put option on a futures contract terms


Option selling terms a a futures put on contract


Put OptionsA Put option gives the owner the right, but not the obligation to sell the underlying asset (a commodity or futures contract) at the stated strike price on or before the expiration date. In other words the owner of the Put option can sell the underlying asset to the seller of the option at the strike price. Like with a Call option the buyer must sellinng a premium to have this privilege and this premium is the most the buyer is liable for and the most they termss lose.

As a buyer of Put options we hope the commodity falls in price because this will increase the value of the Put option, allowing us to xontract the option later for a higher price than we paid for it. Futures contracts are available for all sorts of financial products, putt equity indexes to sellint metals. Buy a call if you expect the value of a future to increase.

Buy a put if you expect the value of a future to fall. The cost of buying the option is the premium. Definition:A put option is a derivative of a futures contract. The parties initially agree to buy and sell an asset for a price agreed upon tedms (the forward price), with delivery and payment occurring at a future point, the delivery date. Because it is a function of an underlying sellinv, a futures contract is a derivative product.Contracts are negotiated at futures exchanges, which act as a marketplace between buyers and sellers.

Thispublication is the property of the National Futures Association.Return to table of contentsWhatare known as put selling a put option on a futures contract terms call options are traded on most active futurescontracts. The principal attraction of buying options is that they makeit possible to speculate on increasing or decreasing futures priceswith a known and limited risk. Buying or selling acall The short futures position is an unlimited profit, unlimited risk position that can be entered by the futures speculator to profit from a fall in the price of the underlying.The short futures position om also used by a producer sellign lock in a price of a commodity that he is going to sell in the future.

See short hedge. Short Futures Position ConstructionSell 1 Futures ContractTo create a short futures position, the trader must have enough balance in his account to meet the initial margin requirement for each futures contract he wishes to sell. Unlimited Profit PotentialThere is no maximum profit for the short futures position.




Selling a put option on a futures contract terms

Selling a put option on a futures contract terms

Selling a put option on a futures contract terms



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