commodity options

An option contract which gives the buyer the right, but not the obligation, to buy or sell a specified quantity of a commodity at a specific price within a specified period of time. The seller of the commodity option has the obligation to sell the commodity or futures contract, or buy it from the option buyer, at the exercise price if the option is exercised.  Commodity options are also known as options on futures, because the underlying asset is a futures contract.  They can be used for various option strategies, including option spreads, with a plethora of risk and reward prospects. 

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