Futures-the subject matter that is traded now but will be settled or delivered in the future. This subject matter can be commodities, such as gold, crude oil, agricultural products, financial instruments or financial indicators.

Option-refers to the right to buy and sell in a certain period of time in the future. It means that the buyer has the right to buy or sell a certain number of specific subject matter from the seller at a predetermined price (referring to the strike price) in a certain period (referring to American options) or at a certain future date (referring to European options), but has no obligation to buy or sell.

Second, the difference between futures and options.

(a) Different themes

The subject matter of financial futures trading is financial commodities or futures contracts, while the subject matter of financial options trading is the right to buy and sell financial commodities or futures contract options.

(B) the symmetry of investors' rights and obligations is different

The option is a one-way contract, and the buyer of the option can perform or not perform option contracts's rights after paying the insurance premium, without having to bear the obligation; Futures contracts are two-way contracts, and both parties to the transaction have the obligation to deliver futures contracts at maturity. If you are unwilling to actually deliver, you must hedge within the validity period.

(3) Different performance guarantees

Both buyers and sellers of financial futures contracts must pay a certain amount of performance bond; In option trading, the buyer does not need to pay the performance bond, but only requires the seller to pay the performance bond, which shows that he has the corresponding financial resources to perform the option contracts.

(D) Different cash flows

In the transaction of financial options, the buyer has to pay the insurance premium to the seller. The insurance premium is the price of the option, which is about 5% ~10% of the price of the traded goods or futures contracts. Option contracts can be circulated, and their insurance premiums will change according to the changes in market prices of traded commodities or futures contracts. In financial futures trading, both buyers and sellers have to pay an initial deposit of 5% ~ 10% of the face value of the futures contract, and also charge an additional deposit to the losing party according to the price changes during the trading period; The profitable party may withdraw the excess margin.

(e) The characteristics of profit and loss are different.

The income of the buyer of financial options fluctuates with the change of market price, and its loss is limited to the insurance premium of purchasing options; The seller's income is only the insurance premium of selling options, but its loss is not fixed. On the other hand, both sides of financial futures trading are facing unlimited profits and endless losses.

(VI) The role and effect of hedging are different.

The hedging of financial futures is not for futures, but for the physical object (spot) of the basic financial instruments of futures contracts. Because futures and spot prices will eventually converge, hedging can achieve the effect of protecting spot prices and marginal profits. Financial options can also be hedged. For the buyer, even if he gives up his performance, he only loses the insurance premium and protects the value of his purchase funds. For the seller, either the goods are sold at the original price or the insurance premium is guaranteed.

Third, the difference between option trading and futures trading.

1. The rights and obligations of the buyer and the seller are different.

The risks and benefits of futures trading are symmetrical. Both parties to a futures contract are endowed with corresponding rights and obligations. If we want to avoid the obligation of futures contract due, we must hedge before the contract delivery date, and the rights and obligations of both parties can only be exercised when the delivery date comes.

However, the risks and benefits of option trading are asymmetric. An option contract gives the buyer the right to buy or sell within the validity of the contract. That is to say, when the buyer thinks that the market price is favorable to him, he exercises the right to ask the seller to perform the contract. When the buyer thinks that the market price is unfavorable to him, he can give up his rights without consulting with the option seller, and his loss is only a small royalty paid in advance for purchasing the option. It can be seen that the option contract is not mandatory for the buyer, and the buyer has the right of execution and waiver; But for option sellers, this is mandatory. In American option, the buyer of the option can demand to perform the option contract on any trading day within the validity period of the option contract, while in European option trading, the buyer can only demand to perform the option contract when the performance date of the option contract comes.

2. The content of the transaction is different.

In terms of transaction content, futures trading is a standardized contract to pay a certain number and grade of physical objects in the future, while option trading is a right, that is, the right to buy and sell a certain subject matter at a fixed price in a certain period of time in the future.

3. The delivery price is different

The futures price for due delivery is formed by bidding, which comes from the expectation of all participants in the market for the maturity price of the contract subject matter, and the focus of all parties in the transaction is on this expected price; The price of the due delivery option shall be determined according to the regulations when the option contract is launched for listing. This is a contract constant that is not easy to change. The only variable of standardized contract is option premium, and the focus of both parties is on this premium.

4, the provisions of the deposit are different.

In futures trading, both buyers and sellers must pay a certain performance bond; In option trading, the buyer does not need to pay the deposit, because his biggest risk is the premium, so he only needs to pay the premium, but the seller must pay the deposit and add the deposit if necessary.

5. Different price risks.

In futures trading, the price risk borne by both parties is infinite. In option trading, the loss of the option buyer is limited, the loss will not exceed the premium, and the profit may be unlimited-in the case of buying call options; It may also be limited-in the case of buying put options. The loss of the option seller may be infinite-in the case of selling call options; It may also be limited-in the case of selling put options; The profit is limited, limited to the option fee paid by the option buyer.

6. Different profit opportunities

In futures trading, hedging means that the hedger gives up the opportunity to make profits when the market price is favorable to him, while speculative trading means that he can get huge profits or suffer heavy losses. However, in option trading, because the buyer of options can exercise his right to buy or sell futures contracts, he can also give up this right. Therefore, for the buyer, the profit opportunity of option trading is relatively large. If option trading is combined with hedging trading and speculative trading, it will undoubtedly increase profit opportunities.

7. Different delivery methods

Commodities or assets traded in futures must be delivered at maturity, unless the futures contract is sold before maturity; Option trading cannot be delivered on the maturity date, which makes the option contract invalid when it expires.

8. The delivery price of the subject matter is determined in different ways.

In futures contracts, the delivery price of the subject matter (that is, the futures price) will change at any time due to the uncertainty of the power of the supply and demand sides in the market. In the option contract, the final price of the subject matter is determined by the exchange and the trader chooses.

9. There are different types of contracts.

The futures price is determined by the market, and there can only be one futures price at any time, so when creating a contract type, only the delivery month is changed; Although the final price of options is determined by the exchange, at any time, there may be many contracts with different final prices, and with the different delivery months, options contracts that are several times that of futures contracts can be produced.