Dairy Futures and Options Tutorial

Sellers and Buyers

Put Option - Buyers and Sellers

Put Buyer Put Seller
Pays Premium Collects Premium
Has right to enter into a short future position Has obligation to accept long futures position if assigned
Pays no Performance Bond Insures put buyer by paying Performance Bond

Call Option - Buyers and Sellers

Call Buyer Call Seller
Pays Premium Collects Premium
Has right to enter into a long future position Has obligation to accept short futures position if assigned
Pays no Performance Bond Insures call buyer by paying Performance Bond