What are options and futures contracts, and how can traders use them to hedge or speculate?

Options and futures contracts are financial derivatives that allow traders to buy or sell an underlying asset at a specified price and date. Options give the right (but not the obligation) to buy or sell an asset, while futures require the buyer to purchase, or the seller to sell, at the contract's expiration. Traders use options to hedge against potential losses or speculate on price movements with limited risk. Futures are often used for hedging commodity price risks or speculating on price fluctuations, but they carry the obligation to fulfill the contract, increasing risk.