What Is the difference between Options and Futures?

Here are key differences between Options and Futures contracts:

• Obligation to Honor the Contract: In a Futures Contract, both the buyer and the seller are obligated to fulfil the contract terms. In contrast, with an Options Contract, only the seller is obligated, while the buyer has the right—but not the obligation—to exercise the option or let it expire.
• Margin Requirements: Futures trading typically requires a higher margin compared to Options trading.
• Risk Exposure: Option buyers risk only the premium paid since they can choose not to exercise the contract. However, Futures traders face potentially unlimited risk, as both parties must honor the contract.