Purpose of a futures contract
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Why would an investor buy an option to either buy or sell a stock? What is the purpose of a futures contract? What is the difference between an option contract and a futures contract?
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This explains the purpose of a futures contract
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Index futures and stock options are instruments that enable you to hedge your portfolio or open positions in the market. Option contracts allow you to run your profits while restricting your downside risk.
Apart from risk containment, options can be used for speculation and investors can create a wide range of potential profit scenarios.
A call option is the right, but not the obligation, to buy the stock at a specified price, up to the expiration date. Call options are like security ...
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