What is an option? What are the advantages of options?

option（Option）Also known as the right to choose, it is in the context offuturesA derivative financial instrument generated on the basis of. Essentially, options are pricing rights and obligations separately in the financial field, allowing the transferee of the rights to exercise their rights within a specified time frame regarding whether to conduct a transaction, while the obligated party must fulfill them.


The advantage of options is that they offer unlimited returns while also having limited risk losses. Therefore, in many cases, using options instead of futures for short selling and hedging trades will have lower risks and higher returns than simply using futures arbitrage.