What's the difference between stock options and futures contracts?
1 The deposit system is different. In option trading, because the option buyer does not undertake the exercise obligation, only the option seller needs to pay the deposit, and both the buyer and the seller of the futures contract have to pay a certain performance bond.
The rights and obligations of the parties are different. The option is a one-way contract, and the bulls of the option get the right to perform or not to perform the contract after paying the 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.
3 Different product attributes. Option is the securitization of rights. If you buy a call option, you have the right to buy the underlying asset at the exercise price on the maturity date. The option contract itself is valuable, and the price that investors trade in the option market is the premium of the option.
4 Different income risks. In stock option trading, the risk and return of investment are asymmetric. When the option buyer assumes the finite risk, the income enjoyed by the option seller is limited, that is, it is limited to the royalties, but the risks he assumes may be unlimited.
5 The profit and loss characteristics are different. The return of options fluctuates with the change of the underlying price, volatility and remaining period, and its loss is limited to the cost of purchasing options; Both sides of futures trading are faced with the possibility of unlimited profit and loss.
Futures trading is a cross-time trading method. By signing a standardized contract, the buyer and the seller agree to deliver a specific amount of spot at a specific time and price. An option is an option, which refers to the right to buy or sell a certain quantity of a certain commodity at a certain price at a certain time in the future.
Although stock options and futures contracts are both contracts, they are still different in terms of margin system, rights and obligations of the parties, product attributes, income risks, profit and loss characteristics and so on.