Options and futures
Typically an option is an agreement between two parties that gives the buyer the right, but not the obligation, to purchase or sell an asset at a set price on or prior to a specific date. Options can be traded on several types of underlying securities such as stocks, ETFs, and indices. Forex options work in the same way but are specific to currency pairs and are driven by factors such as interest rates, inflation expectations, and geopolitics. In the realm of synthetic derivative assets, the parties do not take possession of an asset in contrast they are solely wagering on the underlying assets price, up or down.
Typically futures trading is the trading of financial instruments as contracts, it is an agreement between parties that an asset will be exchanged at a predetermined price and date in the future. One party is obligated to purchase the asset once the futures contract expires whilst, when expired, the other party is obliged to produce the asset. In the decentralized space two parties on a peer to peer basis can opt to engage in such an agreement using smart contracts as it relates to digital assets such as cryptocurrency, non-fungible tokens or the digital version of a physical commodity.
