I. Buy corresponding number of options as your Future positions.
For example, if you have a position size of five futures contracts, purchase
five corresponding options to completely hedge your position. Also, make sure
the expiration month of the options you purchase matches the expiration date of
the futures contracts you own.
II.
Select
a strike price that fits your accepted level of risk tolerance. When you
purchase an option, you must specify a strike price. The closer the strike
price is to the current futures price, the more expensive the option.
