Can options replace futures?

Discussion in 'Options' started by thecoder, Sep 19, 2020.

  1. thecoder

    thecoder

    An option writer (seller), of a call option is obligated to sell the underlying asset at a predetermined price if that call option is exercised by the long. This is known as the call writer being assigned. The writer of a call option is paid to take on the risk that is associated with being obligated to deliver ...
    (--> https://www.investopedia.com/ask/an...-between-right-and-obligation-call-option.asp )

    Meaning: option buyer has no obligation to finally take the underlying,
    but the option writer (seller) has the obligation to deliver if the option buyer wishes so.
    So, IMO the net result for the writer is the same in both option and future case, even more flexible in the option case.
    And the margin requirements, though different, are IMO similar.
     
    Last edited: Sep 19, 2020
    #11     Sep 19, 2020
  2. SanMiguel

    SanMiguel

    In November I want to sell you something and you want to buy it from me at a specified price.
    I think the market is going down so I want to fix the price now and avoid the risk of a loss.
    I do not want to give you an option where you can get out of the trade even though I get a little premium for it.
     
    #12     Sep 19, 2020
    thecoder likes this.
  3. stepan7

    stepan7

    You better off to read this book (hardcover edition)
     
    #13     Sep 20, 2020