The rights and obligations of the option buyer and the seller are not equal. The buyer may exercise his rights or waive them. If the buyer exercises his rights, the seller must fulfill the corresponding obligations.
The fees paid by the buyer are called "royalties", the predetermined price of buying and selling is called "exercise price", and the assets bought and sold are called "subject matter".
The difference between options and futures:
Difference 1. Profits and royalties
In futures trading, both buyers and sellers have to pay the trading margin, but neither side has to pay the other side. In option trading, the buyer pays the royalty, but not the deposit. The seller receives royalties, but pays a deposit.
Second, the difference between rights and obligations.
Buyers and sellers of options and futures have different rights and obligations. The rights of both parties to the option are not equal, the buyer has the right to buy and sell assets, and the seller has only the obligation to passively perform; The rights and obligations of both parties in futures trading are equal.
Difference three. Different cash flows.
In option trading, the buyer has to pay royalties to the seller, which is the price of the option; An option contract is negotiable, and its price will change with the price of the underlying asset. In futures trading, both buyers and sellers have to pay a certain percentage of the initial margin of the face value of the futures contract, and during the trading period, they have to collect additional margin from the loss party according to the price change, so that the profit can withdraw the excess margin.
Difference four. Maturity date and exercise date
Futures are not financial products that can hold positions for a long time. It has an expiration date, after which it can no longer be held. Maturity date is one of its validity periods, such as IH2304, and the following number represents April 2023, and the maturity date is April 2 1, so if you don't want to deliver, you need to close your position before April 2 1.
The expiration date of the option agreed by both parties is called "expiration date", and if the option can only be executed on the expiration date, it is called European option; If an option can be exercised at any time on or before the expiration date, it is called an American option.