Futures and options are tools used by investors when trading in the stock market. As financial contracts between the buyer and the seller of an asset, they offer the potential to earn huge profits. However, there are some key differences between futures and options.
In futures the BUYER is obligated to honor the contract whereas in options it is not because he pays the premium to receive the contract.But in both futures and options the contract seller is obligated to buy/sell if the buyer of the contract exercises the right .
Futures requires higher margin than options and has got unlimited loss and profit potential compared to options that has unlimited profit and limited loss potential.Futures are preferred by speculators and arbitrageurs and options by hedgers
