The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market, in which delivery is due at a later date.
A futures contract is a contract between two parties where both parties agree to buy and sell a particular asset of specific quantity and at a predetermined price, at a specified date in future.
CALL OPTION: Buyers of this contract has the RIGHT TO BUY and does not have any obligations . The seller will receive premium from the buyer to agree to this contract . Seller will decide the premium. Buyer of call option makes money when the market price goes ABOVE the strike price.Seller of call option receives premium from the buyer and they will retain it if the price doesnt go above strike price
PUT OPTION: Buyer of this contract has the RIGHT TO SELL and doesnot have any obligations. Seller will receive premium from the buyer.Buyer of put option makes money only when the market price goes BELOW the strike price.Seller of put option enjoy full premium when the price doesnt fall below the strike price.
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