Query on Futures Trade and Settlement

Hi all,

I have a query with regards to Futures trading and settlement.

Query-1

Is Index Futures and Bank Nifty Futures similar to Option Index, barring the high premium to get into the trade? (Leaving maybe MIS product type)

Query-2

Assuming today, I had booked a Single (lot) Futures trade with MIS attribute, will it be settled immediately within the day just like any other trade? (Squared off today and funds settlement on next day)

Query-3

Also, I see certain amount of leverage is given for MIS product for a person to get into the trade-- this is different from NRML trade, so if the margin I pay is 36k (assuming) at premium 10 (assume one lot is 300), and within the day or afternoon, the premium increases to 12, the difference is the profit which will be credited on T+1 day, right?

Query-4

Are there any physical settlement obligation for a futures trade (intraday)? or even for a normal attribute trade?

Query-5

Also, can we book a futures trade at market price? or is it like similar stock call or put option-- a limit order.

I need elaboration, please.

Thanks and Regards

Futures are different than Options, Suggest you read this module on Varsity, which will help you understand Futures better.

Intraday trade, so your position will be squared-off, any profit you make will be available for use from next day.

No physical settlement obligation for Intraday. Physical settlement will happen only on once contract expires on last Thursday if the month, not before that.

Also, Index Futures are cash settled while Stock Futures are physically settled.

You can use Market Order for Futures.

Thanks sir, so once we booked a Futures trade with NRML attribute, we can carry forward it , and we cannot exit until expiry? (Obligation of Physical settlement once we book a futures trade with NRML attribute?)

Also, does SPAN margin+ overnight margin come into play for Futures? (Buy or Sell)

Thanks

1 Like

You can exit your position anytime, no physical settlement.

As mentioned above, physical settlement for Futures happens on last Thursday only after contract expires.

Yes, you will need full SPAN + Exposure margin for overnight positions, you can check margin requirement here.

Secondly, sir, if we booked a Futures trade with an MIS or a NRML attribute, and the premium increases (thereby our margin resulting in immediate profit), we can square off MIS immediately like any intraday trade.

How about the trade with the NRML attribute sir? Can we square it off too or it has any obligations to be carried forward till expiry?

I see (for instance a stock or index future one lot trade), Zerodha shows a margin at the bottom left of the kite web mobile application, this is the margin with which we enter into the trade for Futures right? (or any SPAN+ other charges are there sir)

Its trading is quite similar to Options right sir

Thanks sir

Yes you can square-off immediately.

You can square-off NRML position anytime as well, no obligation.

Yes, this is the margin required to take Futures trade.

Yes it is similar, both Futures and Options follow underlying and move according to underlying price.

Just the difference being it’s more risky and overnight position SPAN comes into play.

Thanks sir

I had put in a Bank Nifty Futures trade by buying 2 or 3 lots within the margin limit as specified by Zerodha (MIS product) – I closed the trade and exited in profit.

I did the same two three times and overall result was an exit from the futures trade with a profit.

Tomorrow this profit minus brokerage , sebi tax, etc will be real profit that will be credited into the broking account .

Are there any other hidden charges?

Query -2

Do SPAN and other charges apply to buyers of futures too? (When they want to carry forward a position)

What is the advantage of BankNifty over Bank Nifty Options?

Any other pointers would be helpful sir.

Thanks

Yes. Intraday profits in F&O are credited on T+1 day.

There are no hidden charges, you can know what all charges are levied by using Brokerage Calculator.

Yes, you need SPAN + Exposure margin for both Buying as well as Shorting Futures.

Both Futures and Options are unique in their own way.

Thanks sir, SPAN and others are for while carrying forward overnight positions right?

Why Zerodha gives leverage for futures MIS but not Options ( just a query)

If I book an MIS Intraday trade the margin that’s showed on the bottom left of the kite mobile application during the booking of the trade is enough to enter into the position and later exit the position either with a profit or loss in the day?

Regards sir

For trading Futures and Shorting Options, SPAN + Exposure margin is needed for Intraday as well.

The premium you pay to purchase Options is already not that high.

Yes.

Sir now that I had exited the Futures position intraday,do I need to pay any extra SPAN Margin (except brokerage etc)

SPAN + Exposure is already factored into the margin amount that’s showed on zerodha mobile kite app (bottom left side) whilst entering into a Futures trade, right?

When you exit the trade, you don’t have to pay any margin.

Yes, the required margin you see on Kite order window includes both SPAN and Exposure margin.

Thanks sir wonderful explanation