Futures contracts and options contracts


Problem: Make a Power Point with details about the differences between using futures contracts and options contracts in order to reduce risk.

1) Are there any advantages to using one of the instruments over the other

2) Is one of these more effective than the other?

3) Are the costs of each different?

4) Calculate how many call options contracts would be needed if you were trying to hedge a portfolio of 200 shares of stock.

5) Please give concrete explanations of each and also make examples where it would be more appropriate to utilize an options contract over a futures contract and vice versa.

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Finance Basics: Futures contracts and options contracts
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