If you trade in options contract then the buyer has the leverage to back out of the deal if the current market price of the share goes beyond the agreed price. The buyer will only respect the deal provided the price of the share remains below the agreed price in the deal. The risk here is the loss of premium that was paid for the contract and probable profit of unlimited amount since the price can go to any level.

If we compare the Options and interest rate futures it is very clear that the probability of profit is unlimited in both the alternatives. However, the probability of loss is unlimited in an interest rate futures and limited to the extent of paying premium in an Options Contract.

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