The Main Reason to Buy an Option on a Futures

question 86

Multiple Choice

The main reason to buy an option on a futures contract rather than buying the futures contract is ________.

• A) to reduce transaction cost
• B) to preserve the possibility for gains
• C) to limit losses
• D) to remove the possibility for gains

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Definitions:

Communicate

To convey information or express thoughts and ideas clearly to someone else through speech, writing, or other forms of media.

Exchange

The act of giving one thing and receiving another in return, especially in terms of goods, services, or monetary currency.

Environmental Force

External factors such as social, economic, technological, competitive, and regulatory conditions that affect an organization's operations and decisions.

Exchange

The act of giving one thing and receiving another in return, especially in context to goods, services, or money.