Options and Futures Contracts

Options and futures contracts are financial agreements to buy or sell assets, like stocks or commodities, at a predetermined price, but at different times. A futures contract obligates the buyer to purchase, and the seller to deliver, the asset on a specific date. In contrast, an option gives the buyer the right, but not the obligation, to buy or sell the asset before a certain date. These instruments are used for hedging against price changes or for speculating to profit from market movements. Their complexities can provide significant opportunities and risks in the financial markets.