What is the biggest difference between an option and a futures contract?
A) Options are traded on exchanges, whereas futures are not.
B) Options give investors a way to manage portfolio risk, while futures do not.
C) Options can be used by speculators to profit from price fluctuations, while futures cannot.
D) Options give their holders the right to buy or sell, whereas futures contracts are obligations to buy or sell.

Question

Quizplus · Accepted Answer

Options provide the holder the right, but not the obligation, to buy or sell an asset at a predetermined price before a certain date. In contrast, futures contracts obligate the holder to buy or sell the asset at a predetermined price on a specified future date.

What Is the Biggest Difference Between an Option and a Futures