What’s the difference between futures and options?
Futures and options are both financial contracts used to trade on a wide variety of markets.
Both futures and options are leveraged instruments with expiry dates. For futures, you’d settle the difference between the contract’s opening and closing price at expiry.
For options, if held to expiry, the profit or loss is determined by the difference between the underlying asset’s price at expiry and the option’s strike price, not the opening and closing prices of the option itself. If you close an option before its expiry, your profit or loss is based on the difference in premium paid and received.
It’s important to note that, while trading leveraged derivatives can amplify profits, it can also magnify losses. That’s because both are based on the full value of the trade, not the margin used to open it. If the market moves against you, you may lose more than your original deposit. It’s important to manage your risk when trading leveraged derivatives.
You can trade options and futures with us. Here’s how:
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Options: get direct access to US-listed options traded on exchange. This gives you exposure to options in their pure form. You can also trade options over the counter (OTC) using spread bets and CFDs. Here, you won’t actually be buying or selling options contracts; you’ll only be trading on their price movements
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Futures: trade US-listed futures on exchanges. These futures contracts are financially settled, not physically delivered. Before the first notice date, you must roll your positions over to the next contract. We’ll close any positions that haven’t rolled over. You can also trade futures via spread bets and CFDs. With spread bets and CFDs, you don’t own the underlying contracts outright