Future Contract trading settlement

#1
Future Contract trading settlement

Hi Experts,
I am a novice in stock market trying to understand the working and applications of futures contract. Difficult to understand how Contracts are bought and sold. This may sound silly question, but please help me to understand.
Let’s suppose there are two people, “X” & “Y” trading on NSE among many others.
  • X bought (long) a 25th March 2021 NIFTY future contract on 3rd March 2021.
  • Y sold (short) a 25th March 2021 NIFTY future contract on the same day.
1. Since futures contract is between two people, will X know who is the other person on the contract (short)? Will Y know who is the other person on the contract (long)?

Next day 4th March 2021 assuming market goes up, X wants to close this contract and make profit.

2. How will X close the contract? Can the short person on this contract say that, he\she does not to close the contract?

3. Vice versa for Y as well?

Please suggest books to understand Indian futures market.

Thank you.
 

Vmaster369

Active Member
#2
Futures are CASH settled.. it;s all about money ...
even if you not square off your position on last day of expiry whatever underline is close it;s settle on cash basic.

meaning at end of expiry
both buyer and seller positing are auto squared off and profit / loss is added to account
CASH settled

and dont worry we are billions of ppls man .. i am sure computer algo are there daily to buy and sell in futures always liquidity is enough

Since you say u are newbie .. never go short .
Trade right buy first then sell
and whatever your trading capital is for future . Deposit half of that in bank move that in bank now then take position and dont over trade
you do that then when share price go down then u have backup from bank .

Google swing trading and do swing trading meaning position are to be hold for weeks
 
Last edited:

Nish

Active Member
#3
Future Contract trading settlement

Please suggest books to understand Indian futures market.

Thank you.
Not an expert ! :)

1) Check official NSE dot com for some info on Futures and Options !

2) Check YTube for live demos explaining N and BN FnO trading on Indian indices !

3) also check the term Pool account of Brokers where shares are temp stored before cross-settlements !
 

john302928

Well-Known Member
#4
Answer to your question
1. X cant know who is Y and Y cant know who is X. Because all trades are computerized trades.
2. X can sell his position with anybody who wants to buy. it doesnt have to be only Y. Yes Y can opt to not to buy back if he is able to withstand the losses. But his position will automatically be squared off by broker if he doesnt have enough cash balance in his account. Either Y cash to bring in additional cash to withstand the losses if he doesnt want to buy back or Broker will close the position if there is no cash in the account to withstand the losses
3.Similarly. if Y want to buy back his position, he can buy it from anyone and it doesnt have to be only X.

Hope it helps
 

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