How Does a Futures Contract Differ from an Options Contract?
A futures contract is an obligation to buy or sell an asset at a set price on a future date. Both parties are bound to the transaction.
An options contract, conversely, gives the holder the right, but not the obligation, to buy (call) or sell (put) an asset at a set price. The options buyer pays a premium for this right.
Futures involve mandatory delivery, while options offer a choice.
Glossar
Options Pricing
Model ⎊ Options pricing refers to the quantitative methods used to determine the fair value of a derivatives contract based on various market inputs.
Futures Contract
Leverage ⎊ Futures contracts in cryptocurrency represent agreements to buy or sell an underlying asset at a predetermined price on a future date, functioning as a derivative instrument that allows for amplified exposure without immediate asset ownership.
Call Option
Upside ⎊ Acquiring a Call Option provides leveraged upside participation in the appreciation of a specific cryptocurrency asset.
Set Price
Determinant ⎊ A set price, within cryptocurrency derivatives, represents a pre-defined value established for an underlying asset or contract, functioning as a critical reference point for valuation and trade execution.
Hedging
Mitigation ⎊ Within cryptocurrency derivatives and options trading, mitigation represents a proactive strategy designed to curtail potential adverse exposures arising from market volatility or systemic risk.
Financial Derivatives
Stewardship ⎊ Involves engineering these contracts to explicitly manage or incentivize positive externalities, such as climate risk exposure or carbon credit valuation.