Library

Grain Price Options Basics

Don Hofstrand (March, 2022)

Summary

An option is the right, but not the obligation, to buy or sell a futures contract. The buyer of an option acquires this right. The option seller(writer) must take the opposite side of the option buyer’s futures position. Option contracts are traded in a similar manner as their underlying futures contracts. All buying and selling occurs by open outcry of competitive bids and offers in the trading pit.