- This topic has 327 replies, 323 voices, and was last updated 2 years, 7 months ago by
.
-
Posts
-
Future:
- Buyer has the rights to buy
- Seller has the rights to sell
- So both are obliged to honor the contract
- Both are equally rewarded when the price moves in their favor.
- Settled on a daily basis.
Options:
- Buyer has the rights to (buy in call option & sell in put option)
- Seller do not have any rights.
- Seller receives a premium to agree on the contract.
- Buyer is rewarded when the price go beyond the strike price in call option & below in put option.
- Seller’s reward is limited to the premium
- Settled at the expiry of the contract.
in future contract both buyer and seller have a rights to exercise and the price value of a contract is decided by spot market and in the option buyer has a rights and seller gets premium he don’t have a rights.
Future contract- Both buyer and seller has the rights and taking equal risk.
Option contract- Buyer is paying the premium and taking limited risk. Buyer of the contract only gets the rights.
Future Contract –
Both buyer and seller has the rights in the contract, they both have the obligation to honor the contract
Both are settled on daily basis based on price movements
Option Contract –
Buyer has the right not to oblige the contract
Buyer has the right to sell the contract
Sellers rights are limited to fixing the premium
Settlement is done after the expiry of the contract
Future contract- Both buyer and seller have the rights and take equal risk with respect to the price movement. Both Buyer and Seller has to deposit Margin with their brokers. MTM settlement is on every day basis.
Option contract- Buyer is paying the premium and taking limited risk. Buyer of the contract only gets the rights. Seller is receiving premium, has no rights but has obligations. Seller has to deposit a margin amount with his Broker.
- You must be logged in to reply to this topic.
