Difference Between Options and Futures
What is the difference between Options and Futures?
What is the difference between options and futures?
Here we will look at options vs. futures.
Your hear the words options and futures all along
Wall Street and in financial circles, but do
you know the difference between options and futures?
Here is a super easy explanation of the differences
between futures and options:
Futures makes the buyer OBLIGATED to buy something at
a certain price in the future and the seller is
OBLIGATED to sell it at the agreed upon price.
It is beneficial to both parties because the buyer knows
the future price and the seller know his future income.
Win-Win.
Options gives the buyer the RIGHT (but not obligated)
to buy something in the future. The seller is however
OBLIGATED to sell it at the price agreed upon.
This makes it more beneficial to the buyer and less
beneficial and risky for the seller. Thus, the seller
charges a premium to compensate for the extra risk.
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