Indices DJIA S&P 500 DAX 30 Nasdaq 100 Nasdaq Comp Nikkei 225 FTSE 100 SMI DJ Stoxx 50 CAC 40 Hang Seng Kospi Nyse Comp AMEX   -     -     -     -     -     -     -     -     -     -     -     -     -     -   10278 1084.6 6085.6 1828.7 2188.1 9062.8 1775.7 6937 1928 Commodites Light Crude Oil Brent Crude Copper Gold Pallad Platinum Silver Dow Diamonds QQQQ   -     -     -     -     -     -     -     -     -   73.64 74.86 348.85 1250.8 518.25 1544.5 19.56 102.9 45.01 Last update: 02-09-2010 14:39:00 (GMT - Live)

Option, Call Option, Put Option, Option Buyer, Option Seller, Puts and Calls Option, Call Option, Put Option, Option Buyer, Option Seller, Puts and Calls In-the-money, At-the-money, Out-of-the-money Delta The option strike price Time Value Decay Strategy A: Buying calls to take advantage of a rising stock market Strategy B:Buying put options to profit from declining live cattle prices Strategy C: Straddles Using Options on CME E-mini S&P 500 futures Basic Option Strategies: Initiating a Market Position Long Futures (1 Long April Live Cattle Futures) Short Futures (1 Short September Euro FX Futures) Synthetic Long Futures (Split Strike) Long Butterfly Long Straddle Ratio Call Spread Call Ratio Backspread Box or Conversion / Reversal Futures or Options? Option An option on a futures contract is the right, but not the obligation, to buy or sell a particular futures contract at a specific price on or before a certain expiration date. There are two types of options: call options and put options. Each offers an opportunity to take advantage of futures price moves without actually having a futures position. Call Option A call option gives the holder (buyer) the right to buy (go long) a futures contract at a specific price on or before an expiration date. For example, a September CME® Japanese Yen 85 call option gives the holder (buyer) the right to buy or go long a yen futures contract at a price of 85 (shorthand for $.0085/yen) anytime between purchase and September expiration. Even if yen futures rise substantially above .0085, the call holder will still have the right to buy yen futures at .0085. Put Option A holder of a put option has the right to sell (go short) a futures contract at a specific price on or before the expiration date. For example, an October 70 CME Live Cattle put gives the put holder the right to sell October CME Live Cattle futures at 70 cents/lb. Should the futures decline to 64 cents/lb., the put holder still retains the right to go short the contract at 70 cents/lb. Option Buyer An option buyer can choose to exercise his or her right and take a position in the underlying futures. A call buyer can exercise the right to buy the underlying futures and a put buyer can exercise the right to sell the underlying futures contract. In most cases though, option buyers do not exercise their options, but instead offset them in the market before expiration, if the options have any value. Option Seller An option seller (i.e., someone who sells an option that he or she didn't previously own) is also called an option writer or grantor. An option seller is contractually obligated to take the opposite futures position if the buyer exercises his or her right to the futures position specified in the option the buyer has purchased. In return for the premium, the seller assumes the risk of taking a possibly adverse futures position. Puts and Calls Puts and calls are separate option contracts; they are not the opposite side of the same transaction. For every put buyer there is a put seller, and for every call buyer there is a call seller. The option buyer pays a premium to the seller in every transaction. The following is a list of the rights and obligations associated with trading put and call options on futures. source: