Chapter 18 Futures Options
The options we have considered so far provide the holder with the right to buy or sell a certain asset by a certain date for a certain price. They are sometimes termed options on spot or spot options because, when the options are exercised, the sale or purchase of the asset at the agreed-on price takes place immediately. In this chapter we move on to consider options on futures, also known as futures options. In these contracts, exercise of the option gives the holder a position in a futures contract.
The Commodity Futures Trading Commission in the US authorized the trading of options on futures on an experimental basis in 1982. Permanent trading was approved in 1987, and since then the popularity of the contract ...
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