One of the Biggest Differences Between a Futures Option and a Futures

question 34

Multiple Choice

One of the biggest differences between a futures option and a futures contract is that

• A) a futures contract can be traded on the secondary market, whereas an option cannot.
• B) the futures contract limits the loss exposure to the price of the contract.
• C) an option can be traded on the secondary market, whereas a futures contract cannot.
• D) the option limits the loss exposure to the price of the option.

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Definitions:

Oranges

A citrus fruit that is a rich source of Vitamin C and is grown in warm climates worldwide, often consumed raw or as juice.

Peaches

A type of fruit with a fuzzy skin, sweet yellow or white flesh, and a stone or pit in the center.

Opportunity Cost

The evasion of possible rewards from diverse options by committing to one alternative.

Oranges

Citrus fruits known for their juicy and sweet flavor, often consumed directly or used in various culinary dishes and drinks.