What is futures and options trading?

Futures and options can be bought and sold through exchanges, much like listed equity shares. This is what is known as futures and options trading.

What is the difference between futures and options?

The main difference between options and futures is the obligation that rests with the buyer of the contract. In futures, the buyer of the futures contract is obligated to make the purchase or sale as specified in the contract. In options, the buyer only has the right, but not the duty, to do so.

What are futures and options with examples?

A futures contract is a kind of derivative contract between two parties to buy or sell the underlying asset at the specified price on a specified date in the future. For example, there are equity stock futures and commodity futures like natural gas futures. An options contract gives the buyer of the contract the right - but not the obligation - to buy or sell the underlying asset at the specified price on a specified date in the future. For example, there are call options that give you the right to buy and put options that give you the right to sell.

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Introduction to Options and Futures

Q: What are futures and options?

Futures and options are derivatives that are traded in the financial markets. They derive their value from the underlying assets, which can be equity stocks, commodities, or currencies.

Looking for a futures and options course that can give you greater clarity on these derivatives? This module on F&O can help you learn futures and options related concepts better. It covers a variety of areas like the futures and options meaning, calculation of payoffs, introduction to options theory and even options Greeks!

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