I am making my first baby steps in learning about future contracts.

In the option market there is something like a covered call, where one can limit the upside risk to the loss of the shares one already ownes. Is there something similar in the futures market?

As my understanding, upon selling a futures contract with price 100$ for a stock XYZ, does it make a difference if I already have that stocks in my portfolio? So I could deliver them for the agreed price of 100$, even if the price at settlement is 300$? The loss would be then restricted to the missed gains plus commission on the contract?

2 Answers 2


Actual options on futures do exist (described in SRiverNet's answer), but this doesn't seem to be what you're referring to. Rather, you're drawing an analogy between a short futures contract and a short call option. You are correct that the risk of a large loss from a short futures contract is offset by owning a corresponding quantity of the underlying.

But the difference is that with futures, all the risk is offset -- you have an arbitrage position that doesn't care how much the underlying price goes up or down, because you can simply deliver the underlying you own. You might as well just have a cash position, unless you're a professional trying to profit from tiny mispricings.

What makes options different is that a covered call still carries some risk, since it doesn't hedge a large down move in the underlying. Compensatingly, as the option seller, you collect a premium, which has no counterpart in futures.


Here's an answer for you:

To cover the risk of a short call position, at any time prior to the options expiration, a trader can buy a futures contract to deliver to the call owner if the short call is exercised. Owning the futures contract to deliver into the call means that the assignment risk is covered; hence the phrase covered call.

This comes from: https://www.cmegroup.com/education/courses/option-strategies/covered-calls.html#:~:text=To%20cover%20the%20risk%20of,hence%20the%20phrase%20covered%20call.

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