Futures Options Trading

I want to go over a common concern with futures options trading. I only recommend and teach selling options if you are covering them by buying options. Sold options that are not covered are called “naked options”. That means that if there is a move against you, and you did not also buy options, there is potential unlimited loss.

If you did cover your sold position by buying an option as protection, you are no longer naked. Now even if a sold contract is covered some still feel nervous if an option they sold is선물옵션 exercised into a futures contract. The buyer of it has the right at any time to exercise the contract. Let’s assume you sold a call to someone. They exercise it and now they are long a futures. That means you are short the futures. Should you be worried?

Two things to consider:

You have unlimited loss potential whether you are selling an option or long or short a futures contract. So the fact that someone exercises an option should not worry you more. Either way, you have unlimited loss potential. But you always want to cover the position. So either way, now that it is covered, you do not have unlimited loss potential.

The second thing is that you should be happy if the seller exercises it if there is still time value left. When they do this, they are giving up on the time value. So if there is $100 time value left and the buyer exercises it, he gives up that time value when he gets the futures. So either way, do not worry if you are protected.

If you only sell uncovered or naked options because you do not want to spend the money to buy options as protection, you might want to re think your strategy. Find cheap options to cover your sold options instead of being naked.


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