What is Futures Contract?
A futures contract is a standardized agreement to buy or sell an asset at a predetermined price on a future date — unlike options, both buyer and seller are obligated to execute.
Formula
Futures Price ≈ Spot Price × (1 + Risk-Free Rate - Dividend Yield) for the contract period
How to Interpret
Futures are used for speculation and hedging. In India, stock futures require margin (typically 15-20% of contract value) and settle on the last Thursday of each month.
Typical Ranges
Track futures premium/discount to spot price. Persistent discount may signal bearish sentiment.