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Obligation to buy: Futures require you to purchase the deliverable if you hold the contract at expiration, while option owners have the right, but not the obligation, to exercise the contract.
A put is the option to sell a futures contract, and a call is the option to buy a futures contract. For both, the option strike price is the specified futures price at which the futures is traded if the option is exercised.
A financial option is a contract between two counterparties with the terms of the option specified in a term sheet. Option contracts may be quite complicated; however, at minimum, they usually contain the following specifications: [8] whether the option holder has the right to buy (a call option) or the right to sell (a put option)
A futures contract can be bought and sold constantly until the expiration date. A trader, for example, might buy a futures contract on crude oil at 10:00 a.m. for $70 and sell it at 3:00 p.m. for $72.
A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts defined by the exchange. [1] Futures contracts are derivatives contracts to buy or sell specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.
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In finance, a put or put option is a derivative instrument in financial markets that gives the holder (i.e. the purchaser of the put option) the right to sell an asset (the underlying), at a specified price (the strike), by (or on) a specified date (the expiry or maturity) to the writer (i.e. seller) of the put.
The options trader makes a profit of $200, or the $400 option value (100 shares * 1 contract * $4 value at expiration) minus the $200 premium paid for the call.
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