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What are futures and options?
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10th Nov 2009 by JonB
Futures and options are both a type of derivative. That means simply that their value derives from some other asset. Eg stock, commodity, bond, currency etc.
Futures and options are heavily traded and can be very useful for both investors looking to hedge or speculators looking to profit. Options are the right to buy or sell a certain asset at a certain price for a certain amount of time. A call option contract may give you the right to buy 100 shares of XYZ at $10.00 until December 2011. A put option contract may give you the right to sell 100 shares of XYZ at $10 until December 2011.
Futures differ in that the hold is obligated to buy or sell the good at a certain price for a certain amount of time, while an option gives you the option of exercising or simply letting the contract expire.
Futures and options are both a type of derivative. That means simply that their value derives from some other asset. Eg stock, commodity, bond, currency etc.
Futures and options are heavily traded and can be very useful for both investors looking to hedge or speculators looking to profit. Options are the right to buy or sell a certain asset at a certain price for a certain amount of time. A call option contract may give you the right to buy 100 shares of XYZ at $10.00 until December 2011. A put option contract may give you the right to sell 100 shares of XYZ at $10 until December 2011.
Futures differ in that the hold is obligated to buy or sell the good at a certain price for a certain amount of time, while an option gives you the option of exercising or simply letting the contract expire.
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9th Nov 2009 In Derivatives
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