FuturesFinancial Dictionary -> Investing -> Futures
The profit margins in futures contracts come from fluctuations in the market. For example you may enter in to a futures contract to buy a certain amount of oil in five years, but in five years the value of the oil may have dropped significantly meaning the seller would make a profit. If however the value skyrocketed then you would make the profits. The price of the sale is agreed beforehand in the contract so it can be seen as a risky investment and sale.
Despite this risk the seller will go to great lengths to predict where the market is heading and along with the buyer will try to come up with a 'futures price' that will best suit the situation. This doesn't mean that both sides won't be bartering for the best deal and there are other outside factors that can affect the agreed price.
An options contract, which is similar to a futures contract, gives the holder the right to exercise the contract's terms, whereas in a futures contract both parties agree and the ultimate transaction must take place. In other words options give the buyer an option to choose.