What are futures and options contracts?
A futures contract is a firm contractual agreement between a buyer and seller for a specified asset to be delivered at a given date in the future. The contract has a standard specification so both parties know exactly what is being traded. Futures contracts are exchange traded and they are not available outside the exchange. A futures is a speculative contract, which hardly ends up in delivery. An Options contract on the other hand is a derivative contract that confers the right but not the obligation to buy (call) or to sell (put) a given asset at a specified price (strike price) for delivery on or before a given date in the future. Buying a call option means buying the right to buy and buying a put option means buying the right to sell. As you can buy the right to buy or sell the right to buy so you can sell the right to buy (i.e. sell a call) or sell the right to sell (i.e.
