Futures markets are the hub of capitalism. They provide the bases for prices at wholesale and eventually retail markets for commodities ranging from gasoline and lumber to key items in the food chain, such as cattle, pork, corn, and soybeans.Just like futures contracts, options are securities that are subject to binding agreements. The key difference between options and futures contracts is that options give you the right to buy or sell an underlying security or asset without being obligated to do so, as long as you follow the rules of the options contract.In addition, options are derivatives.
A derivative is a financial instrument that gets its value not from its own intrinsic value but rather from the value of the underlying security and time. This guide will provide a general overview of the futures market as well as descriptions of some of the instruments and techniques common to the market.