The ability to purchase a contract that gives the investor the right to buy or sell an asset or other contract at a particular price provides considerable flexibility. A futures contract involves an agreement between two parties that they will trade a specified asset at a future date for a price agreed upon today . In order to manage risk, futures contracts and options contracts are used by investors. Discuss the important differences between futures contract and an option contract, and briefly explain the difference in which the futures and options change portfolio risk.