An option on a futures contract works similarly to an option on an equity contract—you can even use some of the same options strategies. Trades in options on futures can include market neutral, multi-leg, and directional trades, depending on how you think the market will move and your risk/reward goals.
When trading options on futures, you can choose from a variety of contract months, strike prices, and expiration dates. You can also use different options strategies, such as buying or selling calls and puts, to further customize your position.
Options on futures offer many benefits, including the ability to hedge your positions and take advantage of market volatility. However, it’s important to remember that options are complex financial instruments and can be risky if not used correctly.