Difference between Options and futures

Question

Accepted Answer

Options and futures are both derivative contracts, but differ in terms of their obligations and flexibility.

Options give the holder the right, but not the obligation, to buy or sell an asset at a predetermined price within a specified time period.
Futures, on the other hand, require both parties to fulfill the contract at a future date, regardless of market conditions.
Options provide more flexibility as they allow investors to choose whether or not to exercise the contract.
Futures contracts are standardized and traded on exchanges, while options can be customized and traded over-the-counter.
An example of an option is a call option on a stock, where the holder has the right to buy the stock at a specific price.
An example of a futures contract is an agreement to buy or sell a certain quantity of a commodity, such as oil, at a predetermined price and date.

Accepted Answer

Basic answer the main 3 differences

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