Options on futures, sometimes called commodity options or futures options, are an important synthesis of futures and options markets. An option on a futures contract gives the buyer the right to buy or sell a futures contract at a later date at a price agreed upon today.
Options on futures trade in futures exchanges and are a rare case where the derivative contract and the instrument on which it is derived trade side by side in an open market. Although options on futures are quite similar to spot assets, there are a few important differences.