Describing How These Options Differ From Equity Options
-Stock Index Options
An index option ( or stock index option) is an option that is based on a stock index or other financial index. All index options are cash settled, meaning there is no delivery of the underlying stocks in the index. Almost all index options have a European-style exercise.
-Currency Options
A currency option is an option that is based on an exchange rate or exchange rate index. Currency options have a European-style exercise and are cash settled, meaning there is no exchange of the underlying currencies.
-Futures Options
A futures option is an option on a specific contract. A futures call option gives the holder the right to purchase a particular futures contract at a specified price ( the call’s stripe price), while a futures put option gives the holder the right to sell a particular futures contract at the put’s strike price.
Exercise of a futures option results in one party receiving a long position in a futures contract and one party receiving a short position in a futures contract. There is no delivery of the asset that underlies the futures contract.