How do futures and options differ?

Question

Accepted Answer

Futures are agreements to buy or sell assets at a specified price on a future date, while options give the holder the right but not the obligation to buy or sell assets at a specified price within a certain time frame.

Futures involve an obligation to buy or sell the underlying asset at a predetermined price and date, while options provide the holder with the right but not the obligation to buy or sell the asset.
Options have a premium cost that the buyer pays to the seller, while futures do not involve any upfront payment.
Futures are standardized contracts traded on exchanges, while options can be traded both on exchanges and over-the-counter.
Options have expiration dates, while futures have a specific delivery date.
Examples: Buying a futures contract for gold means you are obligated to buy gold at a specified price on a future date. Buying a call option for Apple stock gives you the right to buy Apple stock at a specified price within a certain time frame.

Accepted Answer

Futures are contracts to buy or sell an asset at a fixed price on a set date, requiring execution.
Options give the right, but not the obligation, to buy or sell at a set price before expiry.