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A call option is a contract giving its owner the right but not the obligation to buy an LME futures contract(s) at a fixed price (strike price) at any time on or before a given date.
A put option is a contract giving its owner the right but not the obligation to sell and LME futures contract(s) at a fixed price (strike price) at any time on or before a given date.
The cost of purchasing the option is referred to as the premium and, unless the option is traded on, this is a write-off. It is not part of the value of the underlying futures contract. This means it is down to the user's perception of the market and the cost of the option as to whether they choose to use futures or options as their hedging medium.
LME-traded option contracts are available against the underlying futures contracts for all LME non-ferrous metals as well as for LMEX.
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