Future and Options Trading are two types of financial derivatives traded in the stock market.
Futures trading involves an agreement between two parties to buy or sell an underlying asset (such as a stock, commodity, or currency) at an advanced price and time in the future. In futures trading, the buyer agrees to buy the underlying asset on a specific date in the future, and the seller agrees to deliver the asset on that date. Futures trading can be used to stop potential price changes in the underlying asset or to speculate on the future price movements of the asset.
Options trading, on the other hand, involves the right (but not the obligation) to buy or sell an underlying asset at a predetermined price and time in the future. In options trading, the buyer of the option pays a premium to the seller for the right to buy or sell the underlying asset, depending on the type of option. The seller of the option is obligated to sell or buy the underlying asset at the preplanned price and time if the buyer decides to exercise the option. Options trading can be used to stop potential price changes in the underlying asset or for speculation on the future price movements of the asset.
Both futures and options trading involves high levels of risk and is not suitable for all investors. It is important to have a good understanding of the market, as well as the underlying assets being traded, before engaging in futures and options trading.