7/27/2019 NIFTY Index Futures-Examples

1/3

NIFTY Index Futures Understand with a

live Example

We will take an example of NIFTYindex futures and see how it works.

Specification

Lets look at the specification of NIFTY Index futures;

Underlying index S&P CNX NiftyTrading Exchange NSE

Contract Size Permitted lot size shall be 50 and multiples. Minimum value = 2 Lakh

Price steps 0.05

Contracts Available Near month, Mid-month, Far month

Expiry day The last Thursday of the expiry month or the previous trading day if thelast Thursday is holiday

Settlement basis Mark to market and final settlement will be on cash, T+1 basisSettlement price Daily mark to market settlement will consider closing price of the futures

and final settlement will be the closing value of the index

The listing of index futures in a newspaper on a date (Lets say 11-Nov-2009) at NSE is as

follows. The near month is November, mid-month is December, and far month is January. Youcan always have 3 contracts in NSE.

November Contracts:

5080 5110 5075 5090 295200 95000December Contracts:5090 5120 5085 5100 10200 15300

January Contracts:

5105 5135 5100 5115 2650 840

The numbers indicate the following:

Opening price * Days High * Days Low * Closing price * Open position * Number of contracts

traded

How it works?

We will now see a practical example of futures in action.

Decide to Buy:

Suppose I go long on the NIFTY contract on 11-Nov-2009. This means I buy the NIFTY futurescontracts on 11-Nov-2009 at 1:00 PM when the price was 5085. Since each NIFTY futures

7/27/2019 NIFTY Index Futures-Examples

2/3

7/27/2019 NIFTY Index Futures-Examples

3/3

if you want 1 unit of Sensex?), equity futures can be closed by delivery. But currently NSE is

doing cash settlement instead ofdelivery settlement.

http://lastbull.com/trade-clearing-and-settlement-in-stock-markets/http://lastbull.com/trade-clearing-and-settlement-in-stock-markets/