The futures contract is a standardized contract wherein all the variables of the agreement is predetermined. Futures contracts are time bound ., hold an expiry date within which the contract has to be executed. When the trader does not intend to buy a certain commodity on delivery basis but has a short term view (bullish or bearish) on the underlying and intends to benefit from the short term trend reversal he uses the futures and options contracts. If a trader has a short term strong bullish or bearish view on an underlying then he must opt for Futures contract. Options contracts are like insurance policy that a trader uses when he has complex views to secures himself from sudden trend reversal or an unforeseen event/outcome.
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