Getting started in Trading Options

Options on futures are one of the most versatile risk management products offered by CME. These powerful tools can be used to protect against adverse price moves in commodity, interest rate, foreign exchange and equity markets. Whether they are traded for purposes of hedging or speculating, the risk involved can be limited to the amount paid up-front for the option. As a result, they have become an increasingly popular hedging vehicle, and they are used today by corporate treasurers, bankers, farmers and equity portfolio managers throughout the world. This piece offers an introduction to options on futures, including sections on vocabulary, pricing fundamentals, options arithmetic, important concepts, and basic strategies.