First, the differences of basic products.
In theory, anything can be the subject matter of derivatives, but in practice, the subject matter of derivatives needs to meet certain conditions. The higher the coincidence degree of these conditions, the better the contract transaction.
First of all, the theme should be relatively stable for a period of time. For example, commodity futures require a long shelf life. Similarly, commodity options also requires the subject matter to have good stability. Although the spot of many commodities can basically meet the requirements of stable texture, it is much inferior to commodity futures contracts without shelf life, so commodity options should first choose futures contracts as the subject matter. Foreign exchange, interest rates, indexes, stocks and other products basically have no shelf life, so these products can also be used as the subject matter of options in stocks.
Secondly, the quality of the subject matter should be easily divided and the quality should be evaluable. At the same time, the market liquidity is better and the price fluctuates frequently. In the above aspects, commodity options with futures contracts as the subject matter obviously has greater advantages than spot options with spot contracts as the subject matter, so it is not difficult to understand why many commodity options choose futures contracts as the subject matter rather than the commodity spot itself.
Second, the differences in implementation methods.
Both spot options and futures options are executed in European and American ways, but from the economic point of view, the value of European spot options and American spot options is significantly different, and in general, the value of European futures options and American futures options is basically the same. For example, the spot option of stock option, if the stock has a dividend before the option expires, it may be more beneficial to execute the stock option before the dividend ex-dividend date than to wait until the option expires. On the contrary, unless the interest rate of futures options changes greatly, it is unprofitable to execute them in advance in the economic sense, but American options give option holders the convenience of locking in the benefits. In addition, many spot options have to adopt spot delivery because it is difficult to collect unified and authoritative settlement prices, but futures options objectively allow cash delivery, so futures options are much more flexible and convenient than spot options in delivery methods.
Third, the differences in pricing mechanisms.
Because the time value of futures and spot is measured in different ways, for example, stocks can generate dividends, and the appreciation of futures is related to interest rates, which leads to different pricing of spot options and futures options.