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In options the buyer risk is counted but profit unlimited, for seller the risk is unlimited but profit is limited. The buyer will pay non refundable premium to the seller to sign the contract and buyer have rights but have no obligation and vice versa for seller.
In future contract both buyer and seller have equal risk and have rights and obligation till the contract expiry and MTM will happen on daily basis through exchange.
In futures both buyers and sellers have rights and obligations.MTM is followed n there is equal amount of risk for both buyers and sellers.
In options the buyer of the contract has rights but no obligations.the sellers has obligations but no rights for which the sellers receive the premium.the write of the option has to pay the caution depoist and settlement is made on expiry date
The primary difference between option and futures is that option gives the holder the rights but no obligation,where as the holder of future contract is obligated to fulfil the terms of the contract.
<span style=”color: #000000; font-family: gandhiserif-regular-webfont, Helvetica, Arial, Verdana, sans-serif; font-size: 15px; line-height: normal; -webkit-text-stroke-width: 0.150000005960464px;”>A futures owner has the </span><em style=”-webkit-tap-highlight-color: transparent; color: #000000; font-family: gandhiserif-regular-webfont, Helvetica, Arial, Verdana, sans-serif; font-size: 15px; line-height: normal; -webkit-text-stroke-width: 0.150000005960464px;”>obligation<span style=”color: #000000; font-family: gandhiserif-regular-webfont, Helvetica, Arial, Verdana, sans-serif; font-size: 15px; line-height: normal; -webkit-text-stroke-width: 0.150000005960464px;”> to buy or sell a specified quantity of an asset at a specified price on a specified date. In contrast, an options holder has the </span><em style=”-webkit-tap-highlight-color: transparent; color: #000000; font-family: gandhiserif-regular-webfont, Helvetica, Arial, Verdana, sans-serif; font-size: 15px; line-height: normal; -webkit-text-stroke-width: 0.150000005960464px;”>right<span style=”color: #000000; font-family: gandhiserif-regular-webfont, Helvetica, Arial, Verdana, sans-serif; font-size: 15px; line-height: normal; -webkit-text-stroke-width: 0.150000005960464px;”> (but not the obligation) to buy or sell a specified quantity of an asset at a particular price over a specified time period.</span>
A futures owner has the obligation to buy or sell a specified quantity of an asset at a specified price on a specified date. In contrast, an options holder has the right(but not the obligation) to buy or sell specified quantity of an asset at a particular price over a specified time period.
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