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There are three basic characteristics of stock Future:
(2)Contract Size and
Duration: Contract is an agreement for a transaction in the future. How far in the future is decided by the contract duration. Contract duration can be of 1month, 2month, and 3 month. These are called near month, middle month and far month respectively. The month in which the contract expires is called the contract month. The contract can be renewed on date one after the expiry date, as soon as it expires.
Contract size: Contracts cannot be traded for a single share. Instead, every stock futures contract consists of a fixed lot of the underlying share. The size of this lot is determined by the exchange on which it is traded on. It differs from stock to stock.
Expiry: In this system, as near-month contracts expire, the middle-month (2 months) contracts become near-month (1 month) contracts and the far-month (3 months) contracts become middle-month contracts.
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