Future Expiry Day Closing

What is Future Trading?

Assuming the future price of an index or stock and trading that on a contract basis is known as future trading. On NSE the future is trading on a monthly, bi-monthly and tri – monthly basis. The future contract may be called as current month contract, next month contract and far month contract. All the stocks in NSE will not trade in future. As of now, except Jan 2014 index there are 140 stocks that are trading in NSE.

What is Lot Size of Futures?nse-closing-bell

In stock market investors can buy or sell any number of shares through equity trading. As per future trading it can be traded in a lot size. For example a lot size can be 125, 250, 500, 1000, 2000, 4000, 8000, 12000.  So in future trading a stock can be traded in the above mentioned lot size.  Also now there are nifty lot size 50, and bank nifty lot size 25.

What is Margin Money?

The respective amount of trading (buy or sell) an index or stock is known as margin money. An investor should know how to use the margin money correctly. Margin money may differ from one stock to another and also depends on the contract size.

Contract Size = lot size * stock price

For example, consider ITC lot size as 1000 and price as 300 so 1000*300= 3, 00,000

The margin of a single lot of an ITC may be 30,000 or 40,000 i.e. It may be 10% to 25% of the contract size. Sometimes it may be higher in some stocks because the volatile may be high and due to this the margin amount may be higher.

What is Expiry Date?

According to future the contract will trade in three different types such as current month, next month and far month. For example, consider January, February and March and each future contract will get settled (closed) on the last Thursday of that month. If you are trading with January future, you can buy or sell your futures contract with in January month, i.e. Your contract will get closed on the last Thursday of January month. Before that you can close your position at any time. Suppose if the last Thursday of that month is a holiday then the contract will get a closed day before (Wednesday).

How to calculate Expiry Settlement?

On the last Thursday of every month that particular month contract will get closed. The settlement will be based on the price of an index or stock that is trading on the last Thursday of the month. For nifty future the settlement will be based on nifty spot and in stock future the settlement will be based on the equity. The end price will be decided on the post close.

What is Post Close?

The daily closing price of an index or stock is known as post close. The post close can be decided based on the weighted average price. I.e. The weighted average price is calculated based on the last half an hour (3.00 PM to 3.30 PM) volume and price that a stock or index is trading in the market. For each day or the expiry day the post close price of an index or stock is decided on the volume and price of the last half an hour. Many traders are not fully aware of the difference between the last trading price and post close. The traders who know the difference will be gifted to them.

 

 

 

Updated: March 31, 2015 — 12:19 pm
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