What is a futures contract?
A futures contract is an agreement between two parties to buy or sell an asset (Stocks, Indices, Currencies or Commodities) at a certain time in the future for a certain price.
To make trading possible, the exchange specifies certain standardized features of the contract. As the two parties to the contract do not necessarily know each other, the exchange also provides a mechanism that gives the two parties a guarantee that the contract will be honoured.
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Can I hold futures positions even after the expiry of the contract?
Yes, this is possible if the investor chooses to roll over his/her futures positions.
How to roll over a contract during physical settlement?
Rollover is nothing but switching the near-month expiry contract with the next month's expiry contracts on the expiry day. In simple words, It means to exit from the near month expiry contract and take a new position in next month's expiry contract. ...
How is futures trading different from margin trading?
In a margin transaction, the positions are squared off the very same day whereas, in futures trading, the positions can be held until the expiry of the contract. In an intraday margin transaction, the investor has the option of converting his ...
What is underlying? What is the difference between an underlying and a derivative contract?
In derivatives trading, an underlying asset is the financial instrument represented by a derivative and is what gives a derivative its value. An underlying asset often takes the form of stocks, bonds, indices, currencies or commodities, but it can be ...
Can the margin requirement change for the futures contract?
Yes. Margin requirement may change due to the increased volatility in the prices. You can check the margin requirements in our Margin Calculator.