Futures hedging is based on the spot market, and the subject matter of buying and selling futures contracts is the goods or assets in the spot market. Option Option contracts can take commodities or assets in the spot market as the subject matter, and can also take futures contracts as the subject matter. In contrast, the choice is wider.

Second, the profit and loss characteristics are different.

The option contract offsets the potential loss and does not hinder the option holder from gaining income. Futures contracts not only offset the potential loss risk, but also offset the potential gains, that is, break even.

Three, the rights and obligations of the two parties to the transaction are different.

The rights and obligations enjoyed by both parties to a futures contract are symmetrical, and both parties must fulfill the rights and obligations of delivery when the contract expires. However, the parties to the option transaction are different, and the buyer of the option has the right to decide whether to deliver the option-that is, if the buyer chooses to exercise the option, the seller must fulfill his obligations as agreed, and after the option contract is sold, he has no right to choose whether to deliver the option.

Fourth, the deposit to be paid is different.

Both sides of futures trading have to pay margin. For those who participate in option trading, only the seller needs to pay the deposit to ensure the performance of the contract, while the buyer of the option does not.

Futures hedging is mainly aimed at the spot in your hand. If you have spot raw materials ready to sell, and you are worried about price reduction, you will do selling hedging. If you are a processor and you are afraid of rising prices of raw materials, you will do buy hedging and eventually hedge your position in futures. An option is mainly the right to buy a futures contract in the future. You are worried about the future price increase, so you bought a call option, and you have the right to buy this futures contract at a certain price at some time in the future. But if the future market price is not as high as this contract, you can give up the exercise right and buy directly from the spot market at the current price, then you just lose the right to buy options.

Finally, it should be noted that although both futures and options can be hedged, when establishing positions, we must ensure that the quantity is the same, the time is the same or close, and the direction is opposite to the hedging target. These three conditions are convenient for futures hedging, but when making options, it is necessary to determine whether to buy (sell) or put options; Or buy call options and sell put options; Or sell call options and buy put options.