Plz explain about future and options

M

mahekuttan

New Member
#3
#3
Futures are contracts which entitles you to buy or sell the underlying (shares, commodities, currency etc) on a future date(Expiry Date) at a price agreed upon today. The price agreed upon will be based on the current Spot market. Your profit will be the difference between agreed price and the actual price on expiry date. An option is also a similar contract but the only difference is; in Option the buyer have right to either execute or not execute the contract while in futures execution is compulsory.
 
U

umeshmandal

Well-Known Member
#5
#5
mahekuttan said:
Futures are contracts which entitles you to buy or sell the underlying (shares, commodities, currency etc) on a future date(Expiry Date) at a price agreed upon today. The price agreed upon will be based on the current Spot market. Your profit will be the difference between agreed price and the actual price on expiry date. An option is also a similar contract but the only difference is; in Option the buyer have right to either execute or not execute the contract while in futures execution is compulsory.
Click to expand...
In futures too, the execution is not required... it is cash settled on Derivative close based on the price of the underlying!!
 
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