Knowledge

Commodity Option

A commodity call option gives the holder the right to buy a commodity at a specified price (the exercise or strike price) for a certain time. The seller of a call option assumes a corresponding obligation to sell the commodity if and when the call option holder decides to exercise his right to buy. A put option gives the holder the right to sell a commodity at a specified price for a certain time. The seller of a put option assumes a corresponding obligation to buy the commodity if the put option holder decides to exercise his right to sell.