What makes option and future so different ?

Futures trading and options trading represent two of the most common forms of "Derivatives".rnThis trading is not as simple as cash trading. One has to learn some new and different things before to start these trading. Derivatives are financial instruments that derive their value from an 'underlying'. The underlying can be a stock issued by any company, it can be any currency or Gold etc. The derivative instrument can be traded independently of the underlying asset. These instruments also can be bought and sold through exchanges just like stocks Future and Option are the financial derivative instrument the purpose of which is the same that is to reduce risk of future price uncertainty through hedging, arbitraging and speculation. The difference in future option found in its mechanism as well investment while both future and option are the contract which have a 1 month expiry that re traded on fixed lot size. In future contract you only need to pay the margin amount that is 15–20 % of total cost i.e if you buy ICICI 1 lot of 3000 at the price of 300 here your investment would bern3000*300 = 900000 Call option : Give you right to buy an underlying asset (you work on call when the market is bullish) Put Option : Give you right to Sell an underlying asset (you work on call when the market is bearish) For example if you want to buy 3000 share of ICICI at the price of 300/- then your investment would be 900000/- while risk also would be higher if the price goes down. So you can buy a call option of a 300 strike price by paying premium of 4 /- share here you have right to buy the icici 3000 share at 300/- if the price goes above to 300/- or you can exercise the contract by paying full the amount also can sell the same contract at higher price because option premium derived from underlying asset in the call option price of underlying asset increase the premium also increases and for put option price of underlying decrease the premium would increase FuturernFuture contract is a contract where you can buy or sell the underlying asset for a specific price at a pre determined time. If you will purchase future contract that means you are promising to pay the price of that asset on a specified time. And if you are selling a future contract you are effectively making a promise to transfer the asset to the buyer of the future at a specified price at a particular time, These are the following features of future contract BuyerrnSellerrnPricernExpiryrnOptionsrnOptions contracts are instruments that give the holder of the instrument the right to buy or sell the underlying asset at a predetermined price. An option can be a 'call' option or a 'put' optionrnA call option gives the buyer, the right to buy the asset at a decided price. This 'decided price' is called 'strike price'. It should be noted that while the holder of the call option has a right to demand the sale of the asset from the seller, the seller has only the obligation and not the right. For eg: if the buyer wants to buy the asset, the seller has to sell it. He does not have a right to hold it rnSimilarly a 'put' option gives the buyer a right to sell the asset at the 'strike price' to the buyer. Here the buyer having the right to sell and the seller has the obligation to buy.