Need to Know About Stock Future Tips

Stock Futures are basic financial contract with individual stock as an underlying asset. Stock future contract is an agreement made to either sell or buy and specified quantity of equity share for a future date but at a price that has been agreed upon by both the buyer and the seller. These contracts do have standard specifications such as expiry day, market lot, tick size, unit of price, method of settlement etc. the theoretical price of the stocks meant for a future contract is the sum of current spot price and the cost of carry.

The actual price of future contract depends on the demand and supply of the underlying stock in equity trading. Cost of carry is the interest of such a position in the cash market that has been carried to the maturity of the future less dividends that are expected until the expiry of the contract.

When someone buys or sells a stock future, they are not selling or buying a stock certificate but are entering a stock futures contract which is an agreement to buy or sell the stock certificate at an agreed fixed price at a certain date. This type of derivatives trading is different from traditional stock purchase as people don′t own the stock and are not entitled for dividends, also with stock market future one could actually make money even when the market is down.

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