Stock index options tend to be more highly speculative than stock index futures.

Question

Quizplus · Accepted Answer

Normally, the premiums on the call options increase substantially with the passage of time. This gain in value is not only a function of the extended time period associated with the option but is also due to the fact that the S&P futures contract normally has a higher value with the passage of time. Thus, options on stock index futures not only have a time premium (all options do) but may also have an additional premium (or discount) depending on the relationship of the far-term futures market to the near-term futures market.

Stock Index Options Tend to Be More Highly Speculative Than