All About Futures Trading in Stock Market

How futures contracts work

This guide explains futures trading from the forward contract upward. It covers how leverage and margins make a futures position behave differently from owning the asset, and how mark-to-market settlement records gains and losses day by day.

Pricing, hedging and open interest

Pricing, shorting and the use of Nifty futures are covered, along with hedging strategies that use futures to offset risk. Open interest is explained as a measure of activity, and physical settlement is treated as the end point of a contract.

For the reader

• Work through one margin calculation to see how leverage amplifies outcomes.
• Compare a hedge with an outright position on the same asset.
• Check how open interest changes near contract expiry.