662 Part V: Index Options and Futures 
Thus, if one is long calls or short puts and, therefore, acquires a long futures 
contract via exercise or assignment, respectively, he should be aware of when the first 
notice day of the futures is; he could receive a delivery notice on his longfutures posi­
tion unexpectedly if he is not paying attention. 
OTHER TERMS 
Striking Price Intervals. Just as futures on differing physical commodities have 
differing terms, so do options on those futures. Striking price intervals are a prime 
example. Some options have striking prices 5 points apart, while others have strikes 
only 1 point apart, reflecting the volatility of the futures contract. Specifically, S&P 
500 options have striking prices 5 points apart, while soybean options striking prices 
are 25 points (25 cents) apart, and gold options are 10 points ($10) apart. Moreover, 
as is often the case ,vith stocks, the striking price differential for a particular com­
modity may change if the price of the commodity itself is vastly different. 
Example: Gold is quoted in dollars per ounce. Depending on the price of the futures 
contract, the striking price interval may be changed. The current rules are: 
Striking Price 
Interval 
$10 
$20 
$50 
Price of Futures 
below $500/oz. 
between $500 and $1,000/oz. 
above $1,000/oz. 
Thus, when gold futures are more expensive, the striking prices are further 
apart. Note that gold has never traded above $1,000/oz., but the option exchanges are 
all set if it does. 
This variability in the striking prices is common for many commodities. In fact, 
some commodities alter the striking price interval depending on how much time is 
remaining until expiration, possibly in addition to the actual prices of the futures 
themselves. 
Realizing that the striking price intervals may change - that is, that new strikes 
will be added when the contract nears maturity - may help to plan some strategies, 
as it will give more choices to the strategist as to which options he can use to hedge 
or adjust his position. 
Automatic Exercise. All futures options are subject to automatic exercise as are 
stock options. In general, a futures option will be exercised automatically, even if it is