If you go by the definition of Futures in share market, you may confuse at first, so lets discuss it in the simplest and practical terms.
In Equity/Cash segment, you can buy any company's share and hold it for as long as you want then sell it later. However in this segment you can not sell a share first and buy it later, also you can buy only as much shares as your available fund allows.
However in Futures segment, you can buy first and sell later or you can sell first and buy later. Also in Future segment you can not just buy 1 share or sell 1 share, here you need to buy at least 1 lot of shares. 1 lot generally contains shares worth 5-7 Lack rupees, but actually you need around 1.5L only in your account to buy one lot.
Few points about Futures:-
In Equity/Cash segment, you can buy any company's share and hold it for as long as you want then sell it later. However in this segment you can not sell a share first and buy it later, also you can buy only as much shares as your available fund allows.
However in Futures segment, you can buy first and sell later or you can sell first and buy later. Also in Future segment you can not just buy 1 share or sell 1 share, here you need to buy at least 1 lot of shares. 1 lot generally contains shares worth 5-7 Lack rupees, but actually you need around 1.5L only in your account to buy one lot.
Few points about Futures:-
- In Future segment not all the companies are available, only some companies are available which have very good volume.
- Here you can buy first and sell later, or sell first and buy later. However you must have to close your position withing the same month.
- The minimum quantity you have to buy/sell is 1 lot. 1 lot generally consists of as many shares which worth would be around 5-7L.
- For one lot of shares worth 5L, you dont need to pay 5L, you need to have around 1L only in your account.
- Lets say ASHOKLEY share price is Rs. 80, then if you add ASHOKLEY DEC FUT in your list, that price would also be close to 80. Now again, lets say we predicted that it will go up, so we purchased 1 lot of this future. ASHOKLEY is having 6000 shares in 1 lot, so the price would be around 5L for 1 lot, but you need to pay just 1L to buy this lot. Lets say after 3 days it jumped Rs. 5 and you sold your lot. So your profit will be 6000 x 5 = 30000.
- Lets take the same example above, but this time lets say you predicted that it will fall. So instead of buying 1 lot, you sell 1 lot. Lets say after 3-4 days it fell Rs 5, and then you buy 1 lot and closed your position. So your profit will be 6000 x 5 = 30000.