Trader Resources : Options Markets Basics : Distinguishing Options from Futures
Trading in Options and Futures are two very different enterprises. The differences between the two markets are explained in further detail below.

Most importantly, the risks and returns differ in options and futures contracts. Trading in futures contracts results in unlimited potential risks and returns, whereas option holders and writers face limited risks and returns. Option holders limit their negative risk exposure to the premium with unlimited potential returns. Option writers limit their potential returns to the premium received with unlimited negative risk.

Another difference of note between the futures and options markets are the manners in which margin deposits are handled. Both futures contract traders and option writers must post margin deposits to insure they fulfill their obligations if the market moves against them. Option holders, however, are not required to post margin deposits because risk is limited to the premium paid when buying the option. This allows options traders to bypass the largest barrier to entry into the futures markets: maintaining large margin accounts.

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