What Is the Key Difference between Options and Futures Contracts?
Both are financial derivatives, but options grant the right, not the obligation, to buy or sell the underlying asset. Futures contracts, however, represent an obligation to buy or sell the asset at a predetermined price on a specified date.
Options require a premium payment, while futures require margin to be posted. Options offer more flexibility, while futures are used for tighter hedging and speculation.
Glossar
Futures Contracts
Mechanism ⎊ Futures contracts, within cryptocurrency and broader financial derivatives, represent standardized agreements obligating parties to transact an asset at a predetermined price on a specified future date; these instruments facilitate price discovery and risk transfer, extending beyond traditional commodities to encompass digital assets and complex financial indices.
Obligation to Buy or Sell
Condition ⎊ This term defines the core characteristic of a futures contract, where one party assumes a mandatory commitment to execute a transaction at a predetermined price and date.