Which of the following explains the difference between options and futures/forward contracts?
A)An option is the right to buy or sell, whereas a futures/forward contract is an obligation to buy or sell.
B)An option is traded in the over-the-counter market, whereas a futures/forward contract is traded on an exchange.
C)An option has standardized contract specifications, whereas a futures/forward contract can be tailored to meet specific customer needs.
D)An option is traded on an exchange, whereas a futures/forward contract is traded in the over-the-counter market.
E)An option is an obligation to buy or sell, whereas a futures/forward contract is the right to buy or sell.

Question

Quizplus · Accepted Answer

An option gives the holder the right, but not the obligation, to buy or sell an asset at a specified price within a specified time frame, whereas a futures or forward contract binds the parties to buy or sell an asset at a specified price on a specified future date.

Which of the Following Explains the Difference Between Options and Futures/forward