What is Options Trading
An option is an arrangement where one grants another the right to buy or sell something in the future. In the case of Dow index future options, when one buys a Dow call options this entails that they are buying the right/privilege to purchase that underlying Dow future at a definite price at a specific time in the future. This definite price is called "strike price" while the specific time is called the "expiration date".
This trading can also be understood as when one investor buys a put, they are basically selling the market since a call fundamentally buys the market. In the same manner, when an investor sells a put, they are essentially buying the market since selling a call basically sells the market.
In order to have that chance to buy an option on this future, investors pay a so-called "premium." In case the market does not make the strike price of the option, then that option will be considered worthless on the expiration date. Moreover, in case the market does not reach the strike price of the option on the expiration date, it follows that the investor will be allocated the underlying future at that specific strike price.