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Tagged: Derivaties, Futures, Options
Option: No Obligation for Buyer.
Futures: With Obligation for both Buyer/Seller.
A futures holder has the obligation to buy or sell a specified quantity of an asset at a specified price on a specified date.
A options holder has the right (but not the obligation) to buy or sell a specified quantity of an asset at a particular price over a specified time period.
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1. Both buyer and seller has to obligation in futures and in options only seller has obligation and buyer has no obligation
2. Futures has Margin money from buyer and seller ; Premium is paid by buyer in case of options to get the contract signed by the seller
3. Day to day settlement happens in futures and in option that is not the case
Future Contract – Contract with Rights and Obligations
Option : No obligation for Buyer
In future contract both buyer and seller has rights and obligations.
In option contract buyer has rights and no obligations to buy or sell the stocks.
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