figuring out the futures , help

abmail · #1 27th January 2008, 05:45 PM

hi everybody , i am new one to the forum , please help me seniors
i wd like to know how futures work ,

can we invest in index only or in stocks as well.
if i am bullish on a stock , how could i buy in futures and make money out of it . please explain with an example of a stock ,
is the contact term for the futures always 1 month or can i square off whenver i want .

thanks in advance

marcus · #2 28th January 2008, 02:05 AM

Welcome to the forum abmail, nice to have you with us.

1)You can currently trade in 7 indexes and 224 securities in the NSE, I don't know about BSE as I used to trade their but don't any more.
2)You'd make money the same way you would in the cash segment except that trading is done on margin, and profit/loss is credited/debited everyday, so there is no such thing as an unrealized gain or loss. Margin simply means you pay a marginal amount of the total value of the contract. Eg you buy a 50 share nifty contract today at 5400 for this you pay Rs51300/- instead of the entire Rs270000/- tomorrow nifty closes at 5500 so ur gain is Rs5000/- on an investment of Rs51300/-, in futures stock or index its the same thing but not in options
3)In India we have three contract tenures, same month,near month and far month, so at any time there are three available contracts when the same month contract expires the next far month contract starts the next day so you always have 3 contract periods
You can square off at any time before expiry of your contract tenure.

Its really simple somewhere in this section some one had put up a futures tutorial for the indian markets, please find and download that, after reading it all your doubts will be put to rest.

abmail · #3 28th January 2008, 09:37 AM

thanks marcus for your reply

musicjunkie · #4 29th January 2008, 07:44 PM

hello,
if you wan to start trading small then you could try MiniNifty where the lot size is 20 instead of the regular 50. therefore you play alot less for a position. NORMALLY its 10% margin which comes to about 12500 for one position, so every 1% move on nifty in your favour means 10% profit/loss for you.
Currently due to the volatility the margin has been increased to 18%
MJ--

shekharinvest · #5 11th March 2008, 09:45 AM

Marcus,

very well explained. Could you please explain how we can play it on the short side specially with stocks. I have observed that the sell price of futures contracts vary from contract to contract. i.e it different for near month, next month and for the far month. which contract should one enter into?

Thanks in advance.

Could any body on the forum guide me to the tutorial on futures reffered to by the Marcus, where I can find it.

Thanks.

Shekhar