What is the difference between futures and options?
Different investment targets of 1:
The subject matter of futures trading is the contract of the underlying asset of a contract, while the subject matter of option trading is the right of a financial asset.
Simply put, the subject matter of futures trading is a standard futures contract, while the subject matter of option trading is a right to buy and sell.
Although the option is also a contract, the buyer has only the right but no obligation, and does not need to pay the down payment, but the royalty for the original purchase of option contracts has been paid to the seller. The seller needs to undertake obligations, so it needs to pay a deposit to ensure that the buyer's rights are fulfilled on the exercise date.
2 Risk-return characteristics are different:
The profit and loss risks borne by the buyers and sellers of futures contracts are symmetrical, but in option trading, the risks and returns of investors are asymmetrical.
The option buyer bears limited risks, and the profit may exceed the paid royalties, which may even be infinite in theory. The income enjoyed by the option seller is limited, but the potential risk may exceed the usage fee charged, and it may even be infinite in theory.
Three different deposit systems:
In futures trading, both buyers and sellers need to pay a certain margin as a guarantee. In option trading, the option seller should pay the deposit, while the option buyer does not need to pay the deposit because he does not undertake the obligation.
4 Different rights and obligations:
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 are obliged to deliver futures contracts at maturity. If they don't want to actually deliver, they must cancel within the validity period.
Everyone must be familiar with the subject matter of futures, including both some commodities and some financial assets. The underlying assets of options can also be financial assets, physical commodities, exchange rates, interest rates or various comprehensive price indexes.