❓ Question#options-and-futures
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Wolf Cub
Trader · · 70 views
What is the difference between options and futures?
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Both are derivatives but I am confused about the key differences. Can someone explain clearly?
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💡 2 Answers
✅Best Answer
TW
Trading Wolf
Trader · 15 days ago
Futures: obligation to buy/sell at a set price on a set date. Linear payoff, unlimited risk for both parties. Options: right (not obligation) to buy/sell. Buyer has limited risk (premium paid), seller has unlimited risk.
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TW
Trading Wolf
Trader · 15 days ago
Practical difference: futures P&L moves linearly with the underlying. Options P&L is non-linear due to Greeks. Futures are simpler; options offer more strategies but require understanding of time decay and volatility.
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