Showing posts with label Financial Derivatives. Show all posts
Showing posts with label Financial Derivatives. Show all posts

Difference between Put Option and Call Option

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Options
          An options give the holder (firm) the right (not the obligation) to buy or sell an asset in the future at an agreed upon price today.
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Difference between Forward Contract and Futures Contract

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Forward Contract
      These are agreements where 1 party agrees to buy a commodity at a specific price on a specific future date  and the other party agrees to sell the product.
          Goods are actually delivered under forward contracts.
          Forward contract is a tailor made futures contract that is not traded on a organized exchange.
         Unless both parties are morally and financially strong, there is a danger that 1 party will default on the contract, especially if the price of the commodity changes markedly  after the agreement is reached.
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