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If a futures contract moves 50 points and the option only moves 25 points its delta is 50 ; i e the option is only 50 as sensitive to the movement of underlying futures contract The delta will change as an option moves from out-of-the-money to at-the-money to in-the-money approaching 100

PDF Options on Futures: The Exercise and Assignment Process

This note describes the exercise and assignment process for the options on futures that trade on the CME Group designated contract markets — Chicago Board of Trade (CBOT) Chicago Mercantile Exchange (CME) Commodity Exchange (COMEX) and New York Mercantile Exchange (NYMEX)

PDF Trading Options: Understanding Assignment

An option assignment represents the seller’s obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price This obligation is triggered when the buyer of an option contract exercises their right to buy or sell the underlying security

  • What happens if an option series expires?

    Nothing happens. But from time to time there may be exceptions... Pin risk: Suppose the option series is about to expire out of the money, but that it looks likely that the daily settlement price of the underlying futures contract will be very close to the option strike price.

  • Where does option exercise and assignment occur?

    Option exercise and assignment always occurs between member firms of the CME Clearing House, acting as agents for their account holders who are the ultimate owners of long or short positions in the option series. It does not occur directly between account holders themselves.

  • What is an assignment of an option?

    Assignment occurs when the option buyer decides to exercise the contract, requiring the seller to buy (call) or sell (put) the shares of stock covered by the contract. If I sold you a call option on Apple (AAPL) with a strike price of $100, you wouldn’t want to exercise that contract unless Apple traded above $100 per share.

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