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How option contract differ from future contract?
In option contract the buyer of the call/put option has the right to buy/sell but do not have any obligation however the seller has to buy/sell if the buyer exercise the contract, where as in Future contracts both the buyer and seller has the rights and obligation to buy/sell the underlying asset.
The future contract provides rights to buyer(Rights to Buy) and Seller(Rights to Sell) at the agreed price. Margin needs to be paid by both buyer and seller.
But in option contract only the buyer gets the rights and also do not have any obligations. Seller of the contract do not have any rights but will get premium for signing the contract.
In Option contract ,the performance of deal depends on the buyer party ,but in Future contract,both the buyer and seller have rights and any one can order the exchange to perform.
In Future Refundable margin is paid to broker and Option Premium is paid by the buyer to seller.
Option Contract – is one where buyer alone gets rights. If it is Call option the buyer gets the right to buy and if it is Put option the buyer gets rights to sell. Seller gets a premium for signing the contract
Future – is one where both buyer and seller have rights (buyer has buying rights and seller has selling rights) and both pay a minimum amount while signing the contract. The settlement should happen even if one of the parties approach the exchange
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