What is the difference b/w futures forwards and options in derivatives? - finance futures options
in the derivative financial instruments ......... They tell me the difference with an example, if u can ........
Tuesday, January 5, 2010
Finance Futures Options What Is The Difference B/w Futures Forwards And Options In Derivatives?
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Are futures or forward contract to buy something at a certain price at a later date. The options are the choice of buying something at a price at a later date. Introduction of futures required to purchase or sell the item at a specific price on the date in the future. Purchase of an option acquires the right but not the obligation, to purchase items at a fixed price to a later date. The sale of an option agreement requires you to sell or buy an item at a fixed price option on the contract by the buyer.
So, if you buy a futures contract in July 2007 of 1,000 barrels of oil at 65 dollars, which in 1000 agreed to buy barrels of oil at 65 U.S. dollars in July. If you sell the same contract, you have agreed to sell 1000 barrels of oil to $ 65. If you buy a $ 65 option (optional) oil in July, you have to buy the right but not the obligation to 1,000 barrels of oil at 65 dollars in July (it should, when oil above 65 $ / barrel, and if not less). If you sell (write) a call from Julio $ 65/barrel, then you are obligated to sell 1, 000 barrels of oil at $ 65 a barrel on the possibility of the buyer of the call. Hope this helps.
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