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Futures and options

Updated: 4/28/2022
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14y ago

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Futures are contracts that allows you to buy certain commodities at a certain price by a certain date. Unless closed out, futures contracts are binding and the buyer of the contract must be able to buy the commodities binded by the contract.

Options are contracts that gives you the RIGHTS but not the OBLIGATION to buy certain stocks or commodoties at a certain price by a certain date. The main difference is, you can choose to ultimately buy the underlying asset or not, its not binding on the buyer.

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