Options on futures contracts are very popular because
A) They require the holder to purchase at a future date
B) Of their ability to create leverage
C) The seller of the futures contract is under no obligation
D) The amount of the underlying commodity is negotiable
E) None of the above

Question

Quizplus · Accepted Answer

Options on futures contracts are popular because of their ability to create leverage. With a small initial investment, an investor can control a large amount of the underlying asset through an options contract. This allows for potential profits to be amplified, as well as potential losses, making options trading a high-risk, high-reward strategy.

Options on Futures Contracts Are Very Popular Because