natural gas options

Discussion in 'Commodity Futures' started by wonkabar, Jun 24, 2005.

  1. wonkabar


    I have been doing some research on nymex natural gas options and have a question. I see that they have american style options that settle into futures (which settle into physical) that trade in the pit and also european style options that settle into cash that trade on ClearPort.

    What are the practical differences between these two products? Since there are obvioulsy no dividends and they are options on futures when would people ever exercise early? Should they be priced with different models or will the option prices be the same ?

    Does anyone have practical experience with these?