The Main Reason to Buy an Option on a Futures

question 104

Multiple Choice

The main reason to buy an option on a futures contract rather than the futures contract itself 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:

Flexibility

The ability to adapt to changes, challenges, and varying conditions effectively and efficiently.

Management Responsibilities

The obligations and duties of managers to perform tasks and make decisions that contribute to the organization's success.

Operating Distance

Refers to the spatial separation between management and operational activities within an organization or between parts of a geographically dispersed organization.

Project Team

A group of individuals assembled to work on a particular task or project, with skills and roles complementary to the project's requirements.