Difference between future and options

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Accepted Answer

Futures are an obligation to buy/sell an asset at a specific price on a future date, while options give the right but not obligation to buy/sell at a specific price on or before a future date.

Futures are standardized contracts traded on exchanges, while options are customized contracts traded over-the-counter.
Futures have unlimited profit and loss potential, while options have limited risk and unlimited profit potential.
Futures require margin, while options require a premium.
Examples of futures include stock index futures and commodity futures, while examples of options include call and put options on stocks and futures.
Futures are settled on a daily basis, while options are settled on the expiration date.

Difference between future and options

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