Futures and options
FUTURES OPTIONS - POINTS TO REMEMBER 1. Contract details: The futures contract will also mention the method of settlement. 2. Trade venue: The trade in futures takes place on the stock exchange. 3. Types of assets covered: Futures and options contracts can cover stocks, bonds, commodities, 4. A Futures Contract is a legally binding agreement to buy or sell any underlying security at a future date at a pre determined price. The Contract is standardised in terms of quantity, quality, delivery time and place for settlement at a future date (In case of equity/index futures, this would mean the lot size). When learning futures options, on the other hand, traders new to any particular market (bonds, gold, soybeans, coffee or the S&Ps) need to get familiar not only with the option specifications but also with the product specifications of the underlying futures contract.