One difference between futures and options contracts is
A)funds change hands daily in the case of options but not with futures.
B)funds change hands daily in the case of futures, but not with options.
C)in the case of futures funds only change hands when they are exercised.
D)futures are designed to reduce risk while options are not.

Question

Quizplus · Accepted Answer

In futures contracts, funds are settled daily, meaning that gains and losses are realized and settled on a daily basis. However, this is not the case with options contracts, as funds only change hands when the options are exercised. Options contracts give the buyer the right but not the obligation to buy or sell an underlying asset at a certain price during a certain time frame. Futures contracts, on the other hand, obligate both parties to buy or sell the underlying asset at a certain price on a certain date.

One Difference Between Futures and Options Contracts Is