I dont understand the relationship between futures, options, and shorting stocks. Someone help!?

Question

Its all in the title. What are the differences and similarities between the three?

also what are option puts and calls

Answer 1

Other than being traded on a financial exchange,and futures and options being a form of contract to buy or sell at a certain price, there isn't a lot of similarity between them
Futures refer to commodities /products.. like crops..corn, wheat, ..metals, oil.. These are contracts to buy or sell them for delivery at a certain price.
Options refer to company stocks.. These are contracts to buy or sell them at a certain price.
Futures and option selling is done in puts and calls. Put- right to sell a stock /commodity at a certain price. Call- right to buy a stock / commodity at a certain price.
Shorting a stock is to have a broker borrow it so that the investor can use the current value of the stock as a sales price working w/an expectation to buy it later at a lower price. It is banking / betting that the stock will go down in value. It is selling before buying.

Answer 2

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Answer 3

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Answer 4

If you want to learn more about the markets, and the various derivatives available, spend some time at www.investopedia.com, and maybe get a good book on investing (Securities Analysis by Graham & Dodd for starters).