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How futures trading works, margin, settlement, strategies — an advanced guide.
Published by The Retail Trader · AUG 06, 2026 · Features
How futures trading works, margin, settlement, strategies — an advanced guide.
A future is a derivative contract in which the buyer and seller agree to buy/sell an asset at a specific price on a specific date in the future. It is an obligation — not a right like an option.
Keep these five points in mind:
• Obligation — Futures: Yes (must fulfill), Options: No (right only)
• Premium — Futures: No (margin), Options: Yes (premium)
• Max loss — Futures: Unlimited, Options: Premium paid (buyer)
• Margin — Futures: 10-20%, Options: Full premium
• Settlement — Futures: Daily (MTM), Options: At expiry
Keep these six points in mind:
• Lot Size — Minimum quantity (Nifty = 25)
• Margin — Security deposit (10-20% of value)
• MTM — Mark to Market — daily profit/loss settlement
• Expiry — Last Tuesday of month
• Rollover — Shifting from current month → next month
• Premium/Discount — Futures price vs Spot price
Keep these points in mind:
• Nifty at 20,000
• Buy 1 lot Nifty Futures @ 20,050
• Lot size: 25
• Margin required: ~₹1,20,000 (12% of contract value)
• Contract value: ₹5,01,250
• If Nifty goes to 20,500:
• Profit: (20,500 - 20,050) × 25 = ₹11,250
• Return on margin: 9.4%
• If Nifty goes to 19,600:
• Loss: (20,050 - 19,600) × 25 = ₹11,250
• Loss on margin: 9.4%
1. Long Futures (Bullish):
• Buy futures when bullish
• Profit if market goes up
• Risk: Unlimited if market falls
2. Short Futures (Bearish):
• Sell futures when bearish
• Profit if market goes down
• Risk: Unlimited if market rises
3. Calendar Spread:
• Buy near month + Sell far month
• Profit from premium difference
• Low risk, low reward
4. Cash and Carry Arbitrage:
• Buy spot + Sell futures
• Lock in premium difference
• Risk-free profit
Rollover = shifting from current month futures to next month futures. It has to be done before expiry.
How to check rollover:
• OI (Open Interest) increasing in the next month = Bullish rollover
• OI decreasing = Bearish rollover
Keep these points in mind:
• 📌 FUTURES TRADING
• 📊 Obligation to buy/sell at expiry
• 📊 Margin: 10-20% of contract value
• 📊 Expiry: Last Tuesday of month
• 📊 MTM: Daily settlement
• LONG FUTURES:
• 📊 Bullish view
• 📊 Profit if market goes up
• 📊 Risk: Unlimited
• SHORT FUTURES:
• 📊 Bearish view
• 📊 Profit if market goes down
• 📊 Risk: Unlimited
• ROLLOVER:
• 📊 Current month → Next month shift
• 📊 OI increasing = Bullish
• 📊 OI decreasing = Bearish
• STRATEGIES:
• 📊 Long/Short futures (directional)
• 📊 Calendar spread (premium capture)
• 📊 Cash and carry (arbitrage)
Keep these points in mind:
• Options Basics | Option Greeks | Open Interest Guide
The Retail Trader — educational market analysis. Not investment advice.
This article is for educational purposes only — no buy or sell recommendation, no claim of guaranteed returns, and no advisory. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or the official source.