Futures, options and forward contracts belong to a group of financial securities known as derivatives. The profit or loss resulting from trading such securities is directly related to, or derived from, another asset, such as a stock. The main differences between futures and option contracts include: Upfront cost: Buyers must pay a premium to purchase an option, Margin requirements: Option buyers do not have to post margin, but option sellers do, Flexibility: The owner of an options contract does not have to execute it – When it comes to investing in futures vs. options the key issue comes down to risk exposure. While options provide the right to do something, futures provide the obligation to do so and have the potential to result in substantial losses.