A futures contract gives its buyer the obligation to purchase the underlying asset and the seller to sell (and deliver) it at a preset date. (If the futures holder liquidates his position prior to expiration, the delivery clause is voided, obviously.)
an options contract, whether a call (buy an asset) or put (sell an asset), grants the holder the right – but not the obligation – to exercise the option. The holder is entitled to simply let the option expire without investing further.<\/p>\n
Futures and options are the derivative instruments in which the buyer and seller enter into an agreement or transaction which will get settled on a future date. In simple terms it is a promise between buyer and seller to transfer the actual underlying assets (commodities, gold, stock, currency etc) on a specific future date at a specific stipulated price as per the agreement.<\/p>\n
To understand this in a better way, let\u2019s compare them :<\/p>\n
Futures
In futures contract the buyer and seller enter into an obligatory agreement to exercise the contract at maturity.<\/p>\n
Both the buyer and seller have the obligation to exercise the contract which means on maturity, seller will transfer the underlying securities and buyer will make the cash payment as per agreed price.<\/p>\n
The buyer does not have to pay any amount for buying a futures contract because it is an enforceable agreement which will get settled on maturity date.<\/p>\n
Options
In options contract the buyer is given an option to decide whether or not he wants to exercise the contract at maturity.
Buyer of the contract has the option to exercise it anytime on or before expiry but seller has the obligation to exercise it. If buyer demands to buy the asset, seller will have to sell it. Options are of two types:<\/p>\n
Call option: It gives the buyer, the right to buy the asset at a strike price.<\/p>\n
Put Option: It gives the buyer a right to sell the asset at the \u2019strike price\u2019 to the buyer<\/p>\n
The buyer has to pay an amount called as \u201cPremium\u201d for acquiring an additional right of having an option to exercise the contract or not.<\/p>\n","protected":false},"excerpt":{"rendered":"
A futures contract gives its buyer the obligation to purchase the underlying asset and the seller to sell (and deliver) it at a preset date. (If the futures holder liquidates his position prior to expiration, the delivery clause is voided, obviously.)an options contract, whether a call (buy an asset) or put (sell an asset), grants […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[7],"tags":[3424,2906,3422,3423,3425,722,523],"class_list":{"0":"post-1100","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-future-and-options","7":"tag-daily-fno-news","8":"tag-future-trading","9":"tag-future-vs-option","10":"tag-futuree-and-trading","11":"tag-list-of-companies-un-der-fn-o","12":"tag-option-trading","13":"tag-stock-trading","14":"entry"},"_links":{"self":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/1100","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/comments?post=1100"}],"version-history":[{"count":0,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/1100\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/media?parent=1100"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/categories?post=1100"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/tags?post=1100"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}