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What do the terms 'Future' and 'Options' mean in share market?
Future and Options are the common forms of derivatives. The major difference lies in the way the gains are received by the different parties.
An option is having the buyer right to buy or sell a share. But it is not an obligation to buy or sell a share at a certain specified time or price, during the duration of the contract.
A Future contract gives an obligation, which is to buy a specified asset to the buyer, as well to a seller to sell or deliver that asset at a specific future date unless the holder’s position is closed prior the expiration.
Updated on: 21-Apr-2022
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