Definition of 1. 1 option
Option refers to a special right acquired by the buyer, that is, within the validity period of the option contract, the buyer has the right to buy or sell a certain subject matter at the agreed price, but the buyer has no obligation to implement it. The buyer of the option can choose whether to execute the option contract or give up the right to execute the option contract within the validity period of the option contract according to his own judgment.
1.2 definition of futures
Futures refers to the financial instruments that buyers and sellers agree in futures contracts to buy or sell a certain subject matter at an agreed price at a certain time in the future. Both parties to a futures contract are obliged to buy or sell a certain subject matter at an agreed price at some future time.
2. 1 option function
The buyer of the option has only rights, but no obligations. The buyer can choose whether to execute the option contract or give up the right to execute the option contract within the validity period of the option contract according to his own judgment. The buyer of the option can choose whether to execute the option contract according to the change of market conditions, so as to obtain more benefits.
2.2 Characteristics of futures
Both futures parties are obliged to buy or sell a certain subject matter at an agreed price in a specific time in the future, and both futures parties are obliged to execute futures contracts. No matter how the market changes, both parties must execute the futures contract at the agreed price.
3. 1 option risk
The buyer of the option has only rights, but no obligations. The buyer can choose whether to execute the option contract according to his own judgment, but there are certain risks. Because the buyer of the option can choose whether to execute the option contract according to the change of market conditions, the buyer of the option needs to have a good grasp of the market conditions in order to execute the option contract in time within the validity period of the option contract and obtain more benefits.
3.2 Futures risk
Both futures parties are obliged to buy or sell a certain subject matter at an agreed price in a specific time in the future, so both futures parties are faced with the risk of price fluctuation. If the market price changes, the futures parties must execute the futures contract at the agreed price, thus facing the risk of loss.
conclusion
As can be seen from the above, options and futures are two important investment tools in the financial market, and there are obvious differences between them. The buyer of the option only has the right, but not the obligation, and can choose whether to execute the option contract according to his own judgment; Both futures parties are obliged to buy or sell a certain subject matter at an agreed price in a specific time in the future, and both parties must execute futures contracts at an agreed price. The buyer of the option needs to have a good grasp of the market, so as to execute the option contract in time within the validity period of the option contract and obtain more benefits; Both sides of futures trading are faced with the risk of price fluctuation. If the market price changes, the futures parties must execute the futures contract at the agreed price, thus facing the risk of loss. Therefore, when choosing options and futures, investors should choose appropriate investment tools according to their own risk tolerance and investment objectives in order to obtain better investment returns.