Index futures permits speculation and if a trader anticipates a major rally in the market he can simply buy a futures contract and hope for a price rise on the futures contract when the rally occurs. We shall learn in subsequent lessons how one can leverage ones position by taking position in the futures market.
In
Example:
Futures contracts in Nifty in July 2001
Contract month | Expiry/settlement |
July 2001 | July 26 |
August 2001 | August 30 |
September 2001 | September 27 |
Contract month | Expiry/settlement |
August 2001 | August 30 |
September 2001 | September 27 |
October 2001 | October 25 |
In the case of BSE Sensex the market lot is 50. That is you buy one Sensex futures the total value will be 50*4000 (Sensex value)= Rs 2,00,000.
The index futures symbols are represented as follows:
BSE | NSE |
BSXJUN2001 (June contract) | FUTDXNIFTY28-JUN2001 |
BSXJUL2001 (July contract) | FUTDXNIFTY28-JUL2001 |
BSXAUG2001 (Aug contract) | FUTDXNIFTY28-AUG2001 |
In subsequent lessons we will learn about the pricing of index futures.
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