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 these are correct.

Question

Quizplus · Accepted Answer

Options on futures contracts allow traders to control a large amount of the underlying commodity with a smaller investment. This is known as leverage, which can amplify both profits and losses. Therefore, option contracts on futures are popular among speculative traders, who are interested in leveraging their positions to maximize profits.

Options on Futures Contracts Are Very Popular Because