Options give an employee the right to buy shares of a company
at some
future time at a
price specified in the option, thereby providing workers an incentive to improve performance and raise the stock
price.
Options on
futures are similar to options on underlying instruments except that options on
futures give the purchaser the right,
in return for the premium paid, to assume a position
in a
futures contract (a long position if the option is a call and a short position if the option is a put), rather than to purchase or sell the
futures contract,
at a
specified exercise
price at any
time during the period of the option.