How Does a Futures Contract Differ from an Option in Terms of Managing Expiration Risk?

A futures contract obligates the holder to buy or sell the underlying asset at a specific price on the expiration date, which carries a large notional value and mandatory execution. An option grants the right, but not the obligation, to do so.

Futures expiration risk is managed by rolling the contract before expiry to avoid delivery or mandatory settlement. Options expiration risk is managed by deciding whether to exercise, sell, or let the option expire worthless.