Equity futures are among the most widely traded derivatives instruments on NSE — yet many traders enter futures positions without fully understanding the mechanics of how they work, the daily settlement process, or the true cost of leverage. This guide provides a complete, practical introduction to futures trading in Indian markets.
A futures contract is a legally binding agreement to buy or sell a specified quantity of an underlying asset (an index or stock) at a predetermined price on a future date (the expiry date). Unlike options, futures are obligations — both the buyer and seller must fulfil the contract at expiry unless they close their position beforehand. In Indian markets, most futures positions are closed before expiry or rolled to the next contract — physical delivery is rare for index futures and uncommon for stock futures.
| Parameter | Nifty 50 Futures | Stock Futures |
|---|---|---|
| Lot Size | 75 units (raised by SEBI in the 2024–25 F&O overhaul; verify current value) | Varies by stock |
| Contract Value | Lot Size × Nifty Level (e.g., 75 × 24,000 = ₹18 lakh) | Lot Size × Stock Price |
| Margin Required | ~10–12% of contract value | ~15–20% of contract value |
| Expiry | Last Thursday of month (or weekly) | Last Thursday of month |
| Settlement | Cash-settled | Delivery-based (physical) |
This is the most important concept for futures traders. Unlike equities where unrealised losses remain on paper until you sell, futures positions are settled daily — profit or loss from the day's price movement is credited or debited from your trading account every evening. If Nifty falls 200 points and you hold one long futures contract (75 units), ₹15,000 is debited from your account that evening, regardless of whether you closed the position. If your margin falls below the maintenance margin level, you receive a margin call — you must deposit additional funds immediately or your broker will square off your position.
Leverage is the whole reason traders use futures — and the whole reason they blow up. The arithmetic makes both sides obvious. Suppose Nifty is at 24,000 and you buy one lot (figures illustrative, using a 75-unit lot):
| Item | Value |
|---|---|
| Contract value | 75 × 24,000 = ₹18,00,000 |
| Margin posted (~12%) | ≈ ₹2,16,000 |
| Nifty rises 1% (+240 pts) | P&L = 240 × 75 = +₹18,000 |
| Return on margin | 18,000 ÷ 2,16,000 = +8.3% |
| Nifty falls 1% (−240 pts) | −₹18,000 = −8.3% on margin |
How to read it: a 1% move in the index becomes an 8.3% swing on your capital — roughly 8× leverage. That cuts both ways with perfect symmetry: the same move that feels like a fast profit on the way up is a margin-call-triggering loss on the way down, and because MTM is settled daily, the loss is debited in real cash that evening, not deferred. This is why position sizing, not prediction, is what keeps futures traders solvent — see our position sizing guide.
| Parameter | Futures | Options |
|---|---|---|
| Obligation | Both parties obligated | Buyer has right, seller has obligation |
| Maximum loss (buyer) | Unlimited (theoretically) | Limited to premium paid |
| Premium | No premium — only margin | Premium paid upfront |
| Leverage | 8–10x typical | Higher implicit leverage |
| Time decay | No time decay | Significant theta decay |
Futures contracts expire on the last Thursday of each month (for monthly contracts). Traders who wish to maintain their position must "roll" it — sell the expiring contract and buy the next month's contract. Rollover costs money if the next month's contract is at a premium to the expiring one (positive cost of carry). Monitor rollover data in the final week before expiry — high rollover at a premium indicates bulls are confident enough to pay the cost of carrying positions forward, as discussed in our Open Interest guide.
Overwatch tracks futures open interest, participant positioning, and classified news in one view — context for reading rollover and cost of carry near expiry.
Open Overwatch ↗Contract sizes are not static. NSE periodically revises lot sizes, and under SEBI's October 2024 framework the minimum notional value of an index-derivatives contract was raised to around ₹15 lakh — materially larger than before — to ensure participants are adequately capitalised. Knowing the current lot size and the resulting notional and margin is the first practical step before trading any futures contract.