Forward commitments versus contingent claims

In short

• Firm commitments oblige both parties and have linear, symmetric payoffs; contingent claims let the buyer choose and have non-linear payoffs.
• With $X = F_0(T)$, a long call is like a long forward with downside protection bought for $c_0$. The two profits are equal at $S_T = F_0(T) - c_0$; above that the forward is better.
• A short put also gains when the price rises, but gives up the upside in exchange for $p_0$. Profits are equal at $S_T = F_0(T) + p_0$; above that the forward is better.
• Rising price helps: long forward, long call, short put. Falling price helps: short forward, long put, short call.
• Firm commitments: no premium, two-way credit risk. Options: premium paid up front, credit risk only for the buyer.