FUTURE AND OPTIONS

Future Contracts: * Definition: Agreements to buy or sell a specific asset at a predetermined price on a future date. * Purpose: Hedge against price fluctuations, speculate on price movements, and facilitate efficient price discovery. * Types: Index futures, commodity futures, currency futures. Options Contracts: * Definition: Contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price on or before a specified expiration date. * Types: Call options (right to buy), put options (right to sell). * Strategies: Used for hedging, speculation, and income generation.