please explain it

More or less, they are the same as stock trading. You're familiar with stock trading, right? That's where you buy or sell some amount of ownership in a company.Options and futures are just different "things" that you can trade. A more technical term in instrument. There are lots of instruments that you can trade: stocks, bonds, futures, options, wheat, corn, cotton, copper, steel, gold, currency, etc.Check out wikipedia for more thorough explanations of what different instruments are.

Options & Futures give you: - the right to buy something (a stock, corn, real estate, etc) - within a specified time frame - at a specified priceSo, I could buy an option to purchase yahoo stock. It breaks down like this - 100 Yhoo shares - Jun 07 - $30So for $85 (as of May 22) I can buy the right to purchase 100 shares of yahoo anytime between now and Jun 15 2007, for $30 per share.If the price of yahoo goes up, I can profit. If it does not, I lose the $85. (If I don't resell the option, and it expires on Jun 15.)

If you are thinking about Futures, I would go with ETF (electronically traded funds) or mutual funds that hold futures. Futures are very hard to trade, and can be very risky. I have been in the business of giving advice for a while, and I would rather put my clients in something that has a solid money manager (mutual fund that buys futures) and a proven track record in all types of markets. So if the market turns suddenly, you don’t lose 100% of you investment (options). You can make the same amount of money with a beta (risk to the market) that is fairly low.

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