What is the difference between futures and options in financial lingo?

I'm interested in learning more about these two forms of financial trading. thanks for some solid info including definitions, possible websites? Thank you.|||Both are standardized contracts that can be traded. They would give you the right to buy and sell a stock or delivery of commodities (grains, fruits, etc.). This is why they call them "derivatives". Both instruments are considered risky and may not be suitable for the novice.





Options: the right to buy (or sell) a stock (or any other financial asset) at any time, before the expiration date. At is inception, it sells (or can be bought) for little, compared to te actual stock price on thecontract. As expiration approaches, its price may rise.





Futures: the right to deliver (or receive delivery) a commodity at a specified date. The price paid is a guaranteed. In this fashion, the farmer knows what he/she will make. So do the manufacturer or retail store. To them, futures is a hedge intrument.





But to many others, futures is a very speculative market. People without any farm (or business at all) create these contracts, as if they actually owned a business. They can't ever deliver or take delivery, because they are just speculators sitting ata a desk. Some sell this contracts to "farmers", giving them a guaranteed price, but hoping the price of grains goes up to flip it (that is, turn aroud and sell it to a true buyer of the commodity, like a supermarket). Others sell a delivery contract the the supermarket, but really are speculators who are lloking for the price of the commodity to fall. They would buy the grain at the recently fallen price and deliver them to the supermarket. (in reallity, they would flip this contract in the trading market).





Hope this helps.|||An option gives you the right to buy or sell something at a agreed price, with a future, if you own it at expiry, you MUST buy or sell at the agreed price. Thus futures are a FAR higher risk than options, but also give far higher profits if done well. Futures are settled on a daily basis, so you cough up or get money on the changing price of the future on a daily basis. Options are only settled at expiry and at the choice of the owner of the option.|||Generally futures is used to refer to commodity trades and options is used to describe options on stocks.





They didn't trade futures on stocks for a number of years, since the '80's but I guess there are a few now. But for the most part the language is used as mentioned.|||The above likes right.





BTW you can by options on Futures as well just to make things a little more complicated.





For web sites: I usually start with Wikopedia but Investopedia can be very help as well.