financial derivatives

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Amit Kumar Soni

Amit Kumar Soni (Querist)

11 January 2011 What is difference between Option and Future?

Manmohan ACA, CS

Manmohan ACA, CS (Expert)

11 January 2011 Options Contract is a type of Derivatives Contract which gives the buyer/holder of the contract the right (but not the obligation) to buy/sell the underlying asset at a predetermined price within or at end of a specified period. The buyer / holder of the option purchases the right from the seller/writer for a consideration which is called the premium. The seller/writer of an option is obligated to settle the option as per the terms of the contract when the buyer/holder exercises his right. The underlying asset could include securities, an index of prices of securities etc.

Futures Contract means a legally binding agreement to buy or sell the underlying security on a future date. Future contracts are the organized/standardized contracts in terms of quantity, quality (in case of commodities), delivery time and place for settlement on any date in future.

source https://www.caclubindia.com/articles/what-is-derivative--1988.asp

Amit Kumar Soni

Amit Kumar Soni (Querist)

12 January 2011 Thank u sir

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