Tuesday, December 6, 2011

If you buy a futures option call and the strike prices rises?

Just a little futures option question:





Say you buy a call at the strike price of 9525. The strike price settles at 9600 at expiration. Is this a loss or a gain?????|||The strike price of an option does not change. The price of the underlying changes. In this case the underlying is a futures contract.





For a call option the value at expiration is zero unless the settlement price is greater than the strike price, in which case the value is the settlement price less the strike price. In your example that is 9600-9525=75. If you paid less than 75 for the options contract when you bought it you have a profit. If you paid more than 75 when you bought it you have a loss.|||It depends on the premium you paid for the option. It is in the money so, assuming you paid nothing for it you would receive 75, not taking transaction or tax costs into account, because you could buy the underlying in the market for 9525 and sell it for 9600 . If you paid more than 75 for it you would be losing money.|||You seem to be a little muddled.Futures and options are different things.


As someone else said the strike price doesn't alter. That's why it is called a strike.


The loss or gain is determined on the increase or decrease of the premium paid.|||the strike prices of options are fixed, they never change.

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