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Generally a “long call” would mean that you bought a call option. If you sell/write the contract, you’re short. Your position is in the derivative instrument it
by ptr 6y ago
Generally a “long call” would mean that you bought a call option. If you sell/write the contract, you’re short. Your position is in the derivative instrument itself, it's not cascaded onto the underlying.
I also know multi-layered derivatives such as options on options and options on futures exist (as I’ve written code for them), but I’m curious what they’re used for.
- dmurray 6y agoOptions on futures are mostly just a convenient way to specify an option on the underlying product. Instead of having the option to buy gold bars (which trade on a different exchange), you have the option to buy gold futures, which has 99% the same behaviour in terms of price. Options on options are pretty esoteric, I've never heard of anyone actually using one. I guess you can get very leveraged exposure to volatility that way, if that's what you need.