Options Curriculum Guide I. Goals and Objectives A. Understand the application and use of options in price risk management. B. Discuss the basic fundamentals of options and option trading. C. Review the reasons to consider options. Option buyers are not subject to margin calls.
Options can provide a type of insurance against adverse price moves.
An option is a choice. It is the right, but not the obligation, to buy or sell something, in this case a futures contract, at a specific price on or before a certain expiration date. There are two sides to every option. Each put option and each call option has a buyer and seller. An option seller receives a premium from the buyer and is obligated to take the opposite futures position upon exercising the option by the buyer.