Futures refers to forward "commodity" contracts. Closing such a contract is actually a promise to buy or sell a certain number of "goods" one day in the future. Of course, such "commodities" can be physical commodities such as soybeans and copper, as well as financial products such as stock indexes and foreign exchange.

take for example

If you want to buy baked wheat cake, but it will take four months to buy it, but you don't know what the price will be after four months.

So you first sign a contract with the seller of baked wheat cake to lock the transaction price of baked wheat cake after four months. After four months, you must buy baked wheat cakes at the price of 5 yuan.

In this way, the price of baked wheat cake can be controlled within the expectation, and the risk of not buying baked wheat cake or buying baked wheat cake at a high price after four months is reduced.

Similarly, for the seller of baked wheat cake, he is also worried about the market and risk of baked wheat cake after 4 months. He wants to lock in a market now and achieve the expected income. When both buyers and sellers have the will, the deal is made.

You have the obligation to buy baked wheat cakes, and the other party has the obligation to sell baked wheat cakes.

If after 4 months, the baked wheat cake on the market rises to 8 yuan, and you buy it at the price of 5 yuan, then you earn 3 yuan.

But the sesame seed cake is reduced to 2 yuan, and you still need 5 yuan to buy it, because the contract has been signed.

What are options?

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. Simply put, for the buyer, it is a kind of "right" that the "future" can choose to implement or not. The seller of the option has only the obligations stipulated by option contracts.

Or give a chestnut.

Or sign a contract with the seller of baked wheat cake, and buy baked wheat cake at the price of 5 yuan four months later.

Unlike futures, you can buy options from the seller for 50 cents.

Because you spent 50 cents on the option, the seller of baked wheat cake is obliged to sell it to you after 4 months, and you have the right to choose whether to buy it or not.

When sesame cakes rose to 8 yuan, they were bought at the price of 5 yuan.

You can choose not to buy sesame cakes when the price drops to 2 yuan.

This can compensate the loss of the seller, and the loss of the option fee is less than the loss of the market.

Options and futures, as the two most important on-market derivatives, play an important role in helping investors spread risks and improve returns. However, there are great differences in essential attributes and practical applications, and their influence on investment effect is also different. Next, let's distinguish between options and futures.

1, differences in product attributes

On the surface, both trading options and futures can buy or sell the underlying assets at some time in the future. But there are great differences between them in essential attributes.

Option contract is the embodiment of the buyer's right to buy and sell the underlying assets at the agreed price on the maturity date, while futures is a trading method of paying first and then delivering.

2, the difference between the rights and obligations of buyers and sellers

In the spot market, both buyers and sellers have equal rights and obligations stipulated in the contract, whether trading stocks or commodities. The seller needs to deliver the goods as agreed, and the buyer must pay the consideration.

At this point, futures are similar to spot. Futures contracts are two-way contracts, and both parties to the transaction have the obligation to deliver futures contracts at maturity. If they are unwilling to deliver, they must cancel the transaction and close the position within the validity period.

However, in option trading, the rights and obligations of buyers and sellers are not equal. At the expiration of the contract, the buyer has the right to choose to buy or sell the underlying assets at the price stipulated in the contract, or choose to give up this right, and the seller has the obligation to passively perform the contract according to the buyer's requirements. Once the buyer puts forward the right of exercise, the seller must terminate the option contracts by performing the contract. This is why we usually call the buyer of the option contract the right party and the seller the obligation party.

3. Differences in trading methods

When we open the market page of options and futures in trading software, it is easy to find that options and futures are very different in contract arrangement.

In the option market, there are not only differences in different months, but also differences in exercise price, call option and put option. Moreover, with the fluctuation of the underlying asset price, there may be new option contracts with exercise price, so the number of option contracts is relatively large.

Futures contracts only distinguish delivery months, so the number of futures contracts is relatively fixed and limited.

In addition, investors may need to pay margin as performance guarantee when trading options or futures, but the margin arrangement of options and futures is different.

In option trading, the buyer pays the royalties to the seller, but does not pay the deposit; The seller receives the royalty, but must pay the deposit. With the change of the price of the underlying assets, the seller may need to pay an additional deposit.

In futures trading, buyers and sellers have no cash payment relationship when trading, but they all have to pay trading margin. At the same time, due to the implementation of the debt-free settlement system on the same day, the daily position margin of buyers and sellers will also change with the price of the underlying assets.

4. Difference of hedging effect

Insurance function is one of the most basic functions of derivatives such as options and futures, and insurance strategy is also the most commonly used trading strategy for investors in actual transactions. Investors can achieve the purpose of hedging risks by holding opposite derivative positions while holding spot positions. However, because of the different profit and loss characteristics of options and futures, their hedging effects are not the same.

If futures are used for hedging, investors can sell futures contracts when they hold spot long positions or buy futures contracts when they hold spot short positions. However, hedging with futures not only hedges risks, but also hedges potential profits. When the market trend is unfavorable to the spot position held, futures hedging can play the role of hedging risks, but when the market trend is favorable to the spot position held, the future positions held will generate losses and devour the profit at the spot end.

If options are used for hedging, investors can buy put options while holding spot long positions, or buy call options while holding spot short positions. When the market trend is unfavorable to the spot position held, the loss in the spot market will be made up by the profit in the option market. When the market trend is favorable to the spot position, and the profit in the spot exceeds the premium cost, the option hedging portfolio can get additional income.