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Here are other differences between stock and future options, while using best of f&o tips:
1. A notable difference amid futures contracts and stock options is that as a buyer in futures, you have to commit to the delivery as per terms of the contract; however as seller in futures, your obligation is to adhere the delivery terms as accepted in the contract. If a futures holder closes his position earlier before expiry date, he is free of the obligations. There is a considerable flexibility in stock options unlike the future contracts.
2. Another prime dissimilarity here is in terms of the profits acquired in both forms. To profit in options trading, best you can do is either wait till the expiry period or take a contrasting position so as to end up at a higher price difference. This is entirely different in case of futures options. Profits more of rely 'market to market', and therefore are prone to variation in values of positions, sideways to the stock option tips.
3. If you are a sensible trader, you must know that volatility is distinctly considered here. For example, option prices are high in a volatile equity market while just the reverse in case of futures.
1. A notable difference amid futures contracts and stock options is that as a buyer in futures, you have to commit to the delivery as per terms of the contract; however as seller in futures, your obligation is to adhere the delivery terms as accepted in the contract. If a futures holder closes his position earlier before expiry date, he is free of the obligations. There is a considerable flexibility in stock options unlike the future contracts.
2. Another prime dissimilarity here is in terms of the profits acquired in both forms. To profit in options trading, best you can do is either wait till the expiry period or take a contrasting position so as to end up at a higher price difference. This is entirely different in case of futures options. Profits more of rely 'market to market', and therefore are prone to variation in values of positions, sideways to the stock option tips.
3. If you are a sensible trader, you must know that volatility is distinctly considered here. For example, option prices are high in a volatile equity market while just the reverse in case of futures.
