Put and call option
contracts are also traded, based on the BM&F arabica futures
contract expiring in the month after the delivery month of the option, also
priced in United States dollars. There are seven trading positions: February,
April, June, August and November, plus the next two positions in the following
year. Buyers may decide to exercise options from the first business day
following the day a position has been initiated up to the last trading day
before expiry as follows:
Put
option: the buyer (holder) of the option may decide to sell, and the
seller (issuer) of the option must buy the corresponding position on the arabica
futures contract.
Call
option: the buyer (holder) of the option may decide to buy, and the
seller (issuer) must sell the corresponding position on the arabica futures
contract.
All transactions are at the strike price for which
the option was taken and settlement is effected according to all the usual
exchange regulations. Of course, options are exercised only if they show a
profit - otherwise they are simply allowed to expire.