1/1/2024 0 Comments Strike price definition![]() Has obligation to assume a short position in the underlying futures market at option strike price if option buyer exercises the call. Allow the option to expire (if value has decreased).īuys the right to buy the underlying futures instrument at the specified price.īuys the right to sell the underlying futures instrument at the strike price.Sell the option back on the market (if value has increased) – referred to as 'offsetting'.Buy the underlying future at the option strike price – referred to as 'exercising' the option.An options position allows three possible courses of action: Options on Futures Outright OptionsĪn outright option instrument represents the right, but not the obligation, to buy or sell an underlying futures instrument at a specified (strike) price on or before a certain expiration date. The term leg refers to one of the instruments comprising a spread, for example, 'Leg 1' refers to the first instrument of the spread, 'Leg 2' refers to the second instrument of the spread or 'Leg 3' refers to the third instrument of the spread. For example, placing an order on CME Globex for the Three-Month SOFR Average priced bundle SR3:AB 01Y Z3 involving the simultaneous purchase (sale) of futures positions at the averaged price of the legs.Ĭertain futures spread types are available only for certain products.Įxample: Instrument Symbol = SR3: AB Averaged Price Bundle trades at 9705.0 ![]() Futures SpreadsĪ futures spread instrument represents the simultaneous purchase and/or sale of two or more different but related outright futures instruments (legs), depending upon spread definition. The term outright denotes a single purchase or sale of an underlying asset for delivery at a single future date (as distinct from a futures spread). currency in which the instrument is quoted.amount and units of underlying asset per instrument.settlement terms (cash or physical delivery). ![]() An outright futures instrument defines standardized terms for purchase or sale of an underlying security or physical commodity for future delivery.
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