What issues do this firm’s managers face as they consider the choice between options and futures?

Too many derivatives from which to choose? pin it 550 words too

Managers of a firm face several issues when considering the choice between options and futures as investment vehicles. One major issue is the difference in terms of liquidity; while options tend to be more liquid due to their shorter timeframes, futures are typically less liquid since they require margin deposits & involve greater risks due to their longer-term nature.

Furthermore, there is also the consideration of costs associated with each type of investment – for example, options may require higher premiums but could potentially yield greater returns compared to futures which have lower upfront fees but are subject to more market volatility.

In addition, managers must also consider potential tax implications when investing in either option/futures – depending on factors such as jurisdiction & applicable laws etc., these instruments may be taxed differently; thereby having an impact on overall returns.

Lastly, managers should also take into account any other restrictions or regulations that may apply based on local regulations or prevailing industry standards before making any decisions regarding investments into either option/future markets.

Therefore it can be concluded that managers must carefully weigh all available information prior to making any commitments towards either option/futures markets in order to ensure maximum profits going forward.