"mrtravel" wrote in message
news:bsPWe.2544$Op3.1071@newssvr25.news.prodigy.net...
>
>>>
>>
>> The option buyer does not have to exercise the option. The seller is the
>> one who has to supply the crude at the time, or at least another
>> contract. If you buy an option on crude at $60/ barrel and you paid
>> $5/barrel and oil drops to $55 a barrel you just let the option expire.
>> But if the oil went to $70 the seller of the option has to come up with
>> the difference of $10/barrel. To make a small fortune in options, start
>> with a large fortune.
>
> Is it your impression that when you buy oil futures that your only risks
> are the cost of the options, and you can't lose money if the price drops
> when you thought it would rise?
If you buy an option, it is optional if you exercise it. If you buy the
futures contract you own it.
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