In many cases, Options are traded on futures. A put is the option to sell a futures contract, and a call is the option to buy a futures contract. For both, the option strike price is the specified future price at which the future is traded if the option is exercised.

A forward contract is an agreement between two parties to buy or sell an asset at a pre-agreed future point in time. Therefore, the trade date and delivery date are separated. A forward contract is used to control and hedge risk, for example currency exposure risk or commodity prices.

One party agrees (obligated) to sell, the other to buy, for a forward price agreed in advance. In a forward transaction, no actual cash changes hands. If the transaction is collateralized, exchange of margin will take place according to a pre-agreed rule or schedule. Otherwise no asset of any kind actually changes hands, until the maturity of the contract.

The forward price of such a contract is commonly contrasted with the spot price, which is the price at which the asset changes hands. The difference between the spot and the forward price is the forward premium or forward discount.

A standardized futures contract that is traded on an exchange is called a futures contract.