How are index futures options priced?

Discussion in 'Trading' started by 1a2b3cppp, Jan 12, 2009.

  1. Say you were going to buy an NQ call option. Do they work the same as stock options where you have to multiple the price by 100 to get the amount you will pay for it? Or is it a smaller magnitude? Seems like one option being = to 100 contracts would be a lot!
  2. Future options have amultiplier equivilent to the Future.

    So each NQ point = $20. So the multiplier of an option priced at 10.25 makes the option equal = 10.25 * 20 = $205.
  3. that makes sense.

    But then how would you know how many options to use to hedge your position of x number of NQ contracts?
  4. MTE


    The underlying for an options contract is a futures contract, so at expiration it is 1:1. To delta hedge you would use the delta. That is, if a put has a delta of 0.5 then you would use 2 to hedge 1 futures contract.

    The $-value of a point has no purpose here since the two use the same value.

    If you are used to options on stocks then it is equivalent to having 1 options contract on AAPL for example to have 1 share as the underlying rather than the usual 100 shares.
  5. Do index futures options expire when the futures contract expires?

    So for NQH9 it expires in march. Would its associated options also expire in march, like OENF9 P1200? (I'm assuming that's the name of the option... that's what it says in OEC).

  6. different FO's have different multipliers.
    it can get confusing. es = 50, ndx = 100, spx = 250, nq = 20, er2 = 100 (er2 changed to tf)
  7. how do you know when they expire? Is there a different letter code for futures options?
  8. Quarterly futures and futures options expire on the open of option expiration with a special opening settlement and expire into cash. Serial futures options (all months but Mar, June, Sep, Dec) expire at the close of trading on expiration, 4:15 Eastern, and expire into the current quarterly futures contract.
  9. are futures options reverse of normal options?

    How come when I BUY an option (in OEC demo account) my account gets credited, but when I SELL (write) an option, I account gets debited? That's backward.
  10. ok last question:

    I thought options expired, but OEC is asking me if I want to roll them over.

    I own OESF9 C870 and OESF9 P870.

    It's asking me if I want to roll them over and if so, into what option. I have the ability to pick a new expiry month and a new strike price. Is that normal, or is this an OEC demo glitch? Can you normally just roll futures options into any month and strike price you want????

    See attached pic.
    #10     Jan 14, 2009