How are options different from futures?

Options and Futures are derivatives. Both are contracts and are derived from underlying instruments like Stocks, Currency, and Commodities etc. A Future is a contract to buy or sell the underlying asset at a predetermined price and time. The buyer of a Future contract needs to honor the contract at the end. On the other hand, an Option is a contract that gives the holder the right to buy or sell the underlying asset at a predetermined price and time. The buyer of an Options contract may or may not be honored. Other differences between Futures and Options are- In Futures, both the buyer and seller are obligated to honor the contract whereas, in Options, the seller only is obligated to honor the contract when the Option is exercised. Futures require higher margin than Options. Futures have unlimited loss potential whereas losses in Options are limited.