Options are Less risk less with high reward where as Futures is High risk with high reward. Moreover Futures are traded because of the availability of huge margin to trade more number of shares. Options are traded because of the less risk and high reward. Here the buyer of the contract assure the seller that he/she will surely get the shares that has been committed. Daily loss/profit will be debited/credited t the traders account. However if a buyer or seller want to exit they can exit by transferring the contract to other at the available market price. Physical settlement is the accepting the shares at the expiry day or else accepting to give or get the loss/profit from the contract.
, , Futures and Options, Call option, call writer, expiry day, lot size, Put Option, put writer, reward, risk
Hi,
In response to your question
Your Question 1 :: Why trading near month expiry is advised?
It’s about balancing time and cost.
Your Question 2 :: expiry day if we want to exit & no buy
I could not understand your question, could you please elaborate a bit more?