The major differences in Share Trading Futures and Options are below..!:
** Futures are agreements / or contracts to buy or / sell specified quantity of the underlying assets (Shares or Index) at a price agreed upon by the buyer and seller, on or / before a specified time.
Both the buyer & seller are obligated to buy / or sell the underlying asset.
** In case of options the buyer enjoys the right and not the obligation, to buy or / sell the underlying asset.
** Futures Contracts have symmetric risk profile for both the buyer as well as the seller, whereas options have asymmetric risk profile.
In case of Options, for a buyer (or holder of the option), the downside is limited to the premium (option price) he has paid while the profits may be unlimited.
For a seller or / writer of an option, however, the downside is unlimited while profits are limited to the premium he has received from the buyer.
** The Futures contracts prices are affected mainly by the prices of the underlying asset. The prices of options are however; affected by prices of the underlying asset, time remaining for expiry of the contract, interest rate and volatility of the underlying asset.
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