Investment
The main fundamental difference between options and futures are contractual obligations. An option gives the buyer the right, but not the obligation to buy or sell an asset at a specific price at any time during the life of the contract. A futures contract, on the other hand, gives the buyer the obligation to purchase a specific asset, and the seller to sell and deliver that asset at a specific future date, unless the holder's position is closed prior to expiration. An investor can enter into a futures contract with no upfront cost other than commissions.
Buying an options position does require the payment of a premium for the privilege of not being obligated to buy the underlying asset in the event of an adverse shift in price.
Futures contracts typically represent a larger investment in the underlying asset. (from the legal obligation to buy or sell at a given price, and the actual money laid out that is larger than for options). The contract requires the buyer to either purchase the goods by the deadline or sell the contract to another party. So, the financial obligation of futures is potentially very large. Thus, the risk in futures is larger than for options where the premium represents the maximum amount that a purchaser of an option can lose. The gain on an option can be realized by exercising the option when it is in the money (For a call option, when the option's strike price is below the market price of the underlying asset. And for a put option, when the strike price is above the market price of the underlying asset), going to the market and taking the opposite position, or waiting until expiration and collecting the difference between the asset price and the strike price. In contrast, gains are attributed to the futures accounts of the parties at the end of every trading day.
Bibliography
Options and futures. http://www.discountcommoditybrokeronline.com/articles/Options-and-Futures.html
What is the difference between options and futures? Investopedia. http://www.investopedia.com/ask/answers/05/060505.asp
