The value of a futures option is defined as
A) the difference between the option's strike price and its original purchase price.
B) the difference between the option's strike price and the market price of the underlying futures contract.
C) the strike price of the option multiplied by the mark-to-the-market value.
D) the mark-to-the-market value divided by the strike price.

Question

Quizplus · Accepted Answer

The value of a futures option is defined as the difference between the option's strike price and the market price of the underlying futures contract. This difference represents the intrinsic value of the option, indicating how much in-the-money or out-of-the-money the option is based on current market conditions.

The Value of a Futures Option Is Defined as