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 contract are obligations to buy or sell

Question

Quizplus · Accepted Answer

The biggest difference between an option and a futures contract is that options give their holders the right to buy or sell, whereas futures contracts are obligations to buy or sell. This means that an options holder has the choice to exercise the option, while a futures contract holder is required to fulfill the terms of the contract. All the other options provided in the question are incorrect.

What Is the Biggest Difference Between an Option and a Futures