For instance, if you didn't want to commit yourself to buying a futures contract, you could buy an option on the futures contract. You would then have the right to exercise the option and buy the futures contract at a specific price if it seemed profitable. On the other hand you wouldn't have to exercise the option if it were unprofitable. All you would lose is the premium plus commission and fees. You could also sell your option to someone else if it were more valuable than when you bought it.
Options are ideal for investors who are clever, cautious or indecisive.
Nautica Financial Corporation.