What is the difference between stock options and futures options?

Answer 1

Stock options are associated with the market value of an underlying security instrument that does not have a finite expiration date. The underlying instrument is traded on an exchange such as NYSE, NASDAQ, or OTC.

Futures options are associated with the market value of an underlying futures contract that DOES have a finite expiration date.

Both stock options and futures options have strike prices and expiration dates, and a price per contract known as premium that considers intrinsic value and extrinsic value. Both market options entitle a long position holder the RIGHT but not the obligation to trade the respective underlying at a given strike, and require the short position holder to deliver in the event that the option is exercised.

Stock options are generally based on the right to trade 100 shares at a given price, while futures options are generally based on the right to trade a single futures contract.

Stock options are available for most actively traded securities, while futures options are only available for select futures contracts. For instance, futures options are available for S&P mini futures (ES) and WTI crude (CL), yet are not available for micro futures (MES), nor crude mini futures (QM).

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