Explain the difference between a call option and a long position in a futures contract.
Call option-Right to purchase an asset at a stipulated exercise price
Long position- Commits to purchasing the asset even if asset value increases.
The right to purchase an asset at a stipulated exercise price on or before expiration date is called call option. The long position in futures contract commits to purchasing the asset even if asset value increases.
Difference between a put option and short position in futures contract
1. It is the right to purchase an asset at the stipulated exercise price on or before expiration date.
1. It is an obligation to buy the underlying asset at the future’s price.
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