Differences Between Futures And Options

Futures require both parties to buy/sell assets, while Options give the right, not the obligation, to buy/sell at a set price & date.

Trader agrees to buy/sell an asset at a fixed price on a future date. E.g., buying 100 barrels of oil at ₹3000 in 3 months.

Examples of Futures and Options


Trader has the right, not obligation, to buy/sell at a set price within a time frame. E.g., option to buy 100 shares at ₹2000 in a month.


A binding contract obligating both parties to transact at expiration. Profits/losses arise from price differences. Widely used for hedging and speculation, it has limited flexibility and potentially unlimited risks.

Futures vs Options


A contract giving the buyer a choice to transact, limiting risk to the premium paid. Profits/losses stem from market vs. strike prices. Used for hedging and leveraging, it offers more flexibility than futures.


Types Of Options

Options are of two types: * Call Options (right to buy an      asset at a set price) * Put Options (right to sell an   asset at a set price)

Types Of Futures Trading

* Stock (based on stocks) * Index (on Sensex/Nifty ) * Currency (for rate hedging) * Commodity (gold, oil) * Interest Rate (on bonds)

Futures in India

Futures And Options Taxation

In 2023, India hiked the Securities Transaction Tax (STT) on F&O trading by 25%. STT for selling options rose to 0.062% from 0.05%, and for futures, it increased from 0.01% to 0.0125%.

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