What is Future and Option?

Options

Future Contracts

Options are a type of derivatives deriving value from an underlying instrument.

Future Contracts are a type of derivatives deriving value from an underlying instrument.

Gives rights, not the obligation to the investor to buy or sell before the contract expires. Only buyer or seller has obligation to buy or sell.

In future contracts, the buyers and seller must be agreeable on a specific future date for trading before the expiration date.

Buy and sell at the strike price.

Buy and sell at an acceptable future price.

Helpful for retail investors to trade in a certain quantity.

Helpful for institutional investors to trade in big quantity.

Options are less Risky than Futures.

Futures are comparatively riskier than Options

Can provide unlimited profit but limited loss contract to buyers.

Can provide unlimited loss and profit to the buyers.