In options there is rights to buy but there is no obligation to do so ( call option). Similarly there is right to sell but there is no obligation to so ( put option_
In futures- There is right as well as obligation to buy.
In options there is no MTM concept. In futures MTM Concept is applicable.
In options: premium is received by seller but in futures there is concept of premium
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Hi,
My Question 1 :: What is the difference between physical settlement and cash settlement?
Physical delivery is a settlement method where you have to make or take delivery of the underlying asset at the expiration of the futures contract. Typically physical delivery is specified in futures contract where the underlying asset is a physical commodity.
Cash settlement is a settlement method used in certain futures contracts where you don’t have to make or take delivery of the underlying asset at the expiration of the futures contract. Instead, your account is either debited or credited with cash.
My Question 2 :: What is lot Size
A lot size is the standard number of units in the trading security. It is the number of shares one buy in a single transaction and the lot size of futures and options contracts is determined by the stock