Chapter 34: Futures and Futures Options 695 
SUMMARY 
This chapter presented the basics of futures and futures options trading. The basic 
differences between futures options and stock or index options were laid out. In a 
certain sense, a futures option is easier to utilize than is a stock option because the 
effects of dividends, interest rates, stock splits, and so forth do not apply to futures 
options. However, the fact that each underlying physical commodity is completely 
different from most other ones means that the strategist is forced to familiarize him­
self with a vast array of details involving striking prices, trading units, expiration 
dates, first notice days, etc. 
More details mean there could be more opportunities for mistakes, most of 
which can be avoided by visualizing and analyzing all positions in terms of points and 
not in dollars. 
Futures options do not create new option strategies. However, they may afford 
one the opportunity to trade when the futures are locked limit up. Moreover, the 
volatility skewing that is present in futures options will offer opportunities for put 
backspreads and call ratio spreads that are not normally present in stock options. 
Chapter 35 discusses futures spreads and how one can use futures options with 
those spreads. Calendar spreads are discussed as well. Calendar spreads with futures 
options are different from calendar spreads using stock or index options. These are 
important concepts in the futures markets - distinctly different from an option 
spread - and are therefore significant for the futures option trader.