Derivatives-based derivatives

[clylbw]

Just out of curiosity, is there anyone familiar with derivatives-based derivatives, e.g. options on futures and futures on options?

I wonder whether anyone trades them actively. If so, what is their advantage when compared with asset-based derivatives? For example, why would one prefer, say, futures on FTSE options to futures on the index itself? Is it volatility? Or much higher gearing?

Presumably such derivatives are more risky and complicated than the straightforward asset-based ones. Do they have a liquid market?

Many thanks.

 

[clylbw]

Oh dear, another cold topic. I seem to have developed a sixth sense for picking up such topics.

Anyone knows anythings about such derivatives? Admittedly, my knowledge about them is academically based, and I still remember the nightmare I had when trying to do my assignment about them at university, but things should be different in practise, supposedly?

I am particularly interested in futures on options. What are their pros & cons compared with pure, asset-based futures and options?

Thanks really for any information.