In context of financial markets this of the following is correct regarding lsquo Options rsquo and l...........

Economic Affairs Financial Markets

In context of financial markets, this of the following is correct regarding ‘Options’ and ‘Futures’ trading?

1. Under options and futures, the investor is under contractual obligation to buy/sell an asset at a predetermined price

2. Under futures the investor has to mandatorily buy/sell while under options he has the option to buy/sell or not to buy/sell

Select the correct answer using codes given below

1 only

2 only

Both are correct

None is correct

छोटे Courses बड़े Results

Master Financial Markets

Prepare through Micro-courses

Try Now

Explanation:

The fundamental difference between options and futures lies in the obligations they put on their buyers and sellers. An option gives the buyer the right, but not the obligation, to buy (or sell) a certain asset at a specific price at any time during the life of the contract. A futures contract gives the buyer the obligation to purchase a specific asset, and the seller to sell and deliver that asset at a specific future date, unless the holder's position is closed prior to expiration.