Pork Bellies options are option contracts in which the underlying asset is a pork bellies futures contract.
The holder of a pork bellies option possesses the right (but not the obligation) to assume a long position (in the case of a call option) or a short position (in the case of a put option) in the underlying pork bellies futures at the strike price.
This right will cease to exist when the option expire after market close on expiration date.
Pork Bellies option contracts are available for trading at Chicago Mercantile Exchange (CME).
CME Pork Bellies option prices are quoted in dollars and cents per pound and their underlying futures are traded in lots of 40000 pounds (18 metric tons) of pork bellies.
|Exchange & Product Name||Underlying Contract Size||Exercise Style||Option Price Quotes|
|CME Pork Bellies Options||40000 lb|
(Full Contract Specs)
Options are divided into two classes - calls and puts. Pork Bellies call options are purchased by traders who are bullish about pork bellies prices. Traders who believe that pork bellies prices will fall can buy pork bellies put options instead.
Buying calls or puts is not the only way to trade options. Option selling is a popular strategy used by many professional option traders. More complex option trading strategies, also known as spreads, can also be constructed by simultaneously buying and selling options.
As pork bellies options only grant the right but not the obligation to assume the underlying pork bellies futures position, potential losses are limited to only the premium paid to purchase the option.
Using options alone, or in combination with futures, a wide range of strategies can be implemented to cater to specific risk profile, investment time horizon, cost consideration and outlook on underlying volatility.
Options have a limited lifespan and are subjected to the effects of time decay. The value of a pork bellies option, specifically the time value, gets eroded away as time passes. However, since trading is a zero sum game, time decay can be turned into an ally if one choose to be a seller of options instead of buying them.
To buy or sell futures, you need a broker that can handle futures trades.
OptionsHouse is a full fledged Futures Commission Merchant that provides a streamlined access to the futures markets at extremely reasonable contract rates.Click here to open a futures trading account at OptionsHouse.com now!
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