what is a gold option 
a gold option is an options contract that utilizes either physical gold or gold futures as its underlying asset a gold call option would give the holder the right but not the obligation to buy bullion at a future date at a set price while a put option would grant the holder the right to sell it at a predetermined price level the option agreement terms will list details such as the delivery date quantity and strike price which are all predetermined understanding gold optionsa gold option is a derivative that has physical gold or futures on physical gold as the underlying asset the gold options contract is an agreement between two parties to facilitate a potential transaction on a quantity of gold the contract lists a preset price known as the strike price and an expiration date there are two primary types of options contracts put options and call options however there are four types of participants as both the call and put can be either bought or sold types of gold optionsif the holders of call or put options do not exercise their rights the contract will expire as worthless gold options vs gold future contractsa gold option is similar in some ways to a gold futures contract in that the price the expiration date and the dollar amount are preset for both however with a futures contract there is an obligation to uphold the agreement and either buy or sell the agreed upon quantity of gold at the agreed upon price conversely an investor who holds a gold option has the right but not the obligation to claim the relevant position which will depend on if they hold the call option or the put option gold options contract specificationsgold options contracts trade on various derivatives exchanges around the world in the u s investors can find gold options listed on the comex exchange 2comex is the primary futures and options market for trading metals such as gold silver copper and aluminum formerly known as the commodity exchange inc comex merged with the new york mercantile exchange nymex in 1994 and became the division responsible for metals trading 3 today comex and the nymex more broadly operates as a division of the chicago mercantile exchange cme 4comex gold options actually use gold futures rather than physical gold directly and so are cash settled these gold futures have a contract size of 100 troy ounces each and require physical delivery if not closed out 1it is possible to experience significant losses with gold options the condition for exercising gold optionsas with other types of options an investor would only want to exercise their gold option rights if the market conditions make it beneficial if at the time the buyer can use or exercise their call option gold is trading at a price significantly higher than the strike price the investor would benefit by exercising their option the investor could then turn around and quickly sell that gold on the open market for a quick profit 