What is a futures contract?
A futures contract is a standardized legal agreement to buy or sell a specified quantity of an asset—such as stocks, indices, currencies, or commodities—at a set price on a future date. On FYERS, these contracts are traded on regulated exchanges and settled through clearing houses, ensuring performance by both parties.
Key features of a futures contract
- Standardised contract: Defined by the exchange in terms of lot size, expiry, and pricing.
- Exchange-traded: Traded on official exchanges like NSE or BSE. Counterparty risk is minimized by clearing mechanisms.
- Obligation to settle: Both buyer and seller are bound to fulfill the contract at expiry—either by cash settlement or physical delivery (where applicable).
Example of a futures contract
Let’s break it down:
- A futures contract is created for 100 shares at ₹1,050, to be settled after 3 months.
- Total contract value = ₹1,05,000.
- If market price at expiry is ₹1,200 → Profit = ₹15,000.
- If market price at expiry is ₹900 → Loss = ₹15,000.
Your profit or loss depends entirely on the price difference at the time of expiry.
What if...
| Scenario | Resolution |
|---|
| Contract not honored by buyer/seller | The exchange ensures compliance via margins and settlement enforcement. |
| Price moves unfavorably | You are still obligated to honor the contract, possibly incurring a loss or facing a margin call. |
Always monitor your futures positions via FYERS’ “Positions” tab and set alerts. Price swings can trigger margin calls or auto square-offs.
Last updated: 01 Jul 2025
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