Futures contracts are available to buyers and sellers from around the world who trade in organized futures market. Contract sizes and maturities are standardized and are traded only for specific delivery dates. Once a trade is confirmed, the exchange’s clearing house backed by its members capital legally stands behind both the buyer and the seller, thus decreasing the risk of non-payment. Members of the futures exchange market are required to always maintain sufficient money in their account. Everyday gains are received and stored in the investor’s account; losses are subtracted from the investor’s account. If an investor does not maintain the minimum required balance, after one day’s trading his account is required to either add the required amount of money or close. Advantages of futures contracts include faster liquidation of contracts, default risk is substantially lower, and smaller sizes of futures contracts. Investors can also choose currency options which can carry higher risk, but higher profits can be attained. A major difference between option and futures contracts is that with currency options, the holder has the right but not the obligation, to buy or sell the contracted currency at a set price and expiration date. There are two types of options calls and puts. A call gives the holder the right to buy an asset at a certain price with a specific expiration date. Holders of a call will benefit when stock prices are above the strike price, it is said to be In-the-money. A put gives the holder the right to sell an asset at a certain price with a specific expiration date. It is said to be in-the-money if the stock price is below the strike price. However, put writers and call writers are obligated to buy or sell even if the market is not favorable. Both options and futures can be used for hedging purposes or by speculators to predict the movement of the market. Speculators like options because if they can accurately predict the market, they can make unlimited profits. Futures contract provide protection to the holder against risks of exchange rates movements by providing a pre-set price but this added protection decreases the possibility of profits. Many conservative investors will be happy to invest in a futures contract, but this will only provide a limited gain. But, more aggressive investors will choose an option. Even though, options bring more risk which can translate into unlimited profits, it can also bring unlimited losses.   Works Cited "Futures contract." Wikipedia, The Free Encyclopedia. May 8 2009, 01:03 UTC. May 14, 2009 <http://en.wikipedia.org/w/index.php?title=Futures_contract&oldid=288586811>. “Option Basics.” Investopedia, A Forbes Digital Company. 2009. May 14, 2009 <http://www.investopedia.com/university/options/option.asp>