Through an options contract, the trader gets the right, without having an obligation, to sell or buy shares at a specific price at any time prior to the expiration of the contract. Contrastingly, a futures contract requires that the buyer purchase the underlying security or commodity at a specific date in the future, while the seller needs to make the sale on the same date unless the holder’s position closes earlier. Futures and options are two varieties of financial derivatives that investors can use to speculate on how to hedge their risks or speculate on price changes in the market.

Both futures and options are equally risky for beginners and require a significant amount of experience trading in the market. As they tend to be quite complex, option contracts can be quite a risk. Both call-and-put options are just as risky. When an investor purchases a stock option, its risk is defined by its premium or cost. While options are risky, futures can be riskier for individual investors. Futures contracts obligate both sellers and buyers. For price movements with underlying instruments, the seller or buyer might have to provide an additional margin. Additionally, futures contracts might require a larger capital commitment.