Know what is lot size in Futures and what are stock futures.

In financial markets, lot size refers to the minimum quantity of a security or financial instrument that can be traded. For example, if the lot size of a particular futures contract is 100 units, then an investor must buy or sell at least 100 units of the underlying security in a single transaction. In this article, we are going to learn about lot size, stock futures, how is the lot size fixed in futures & Options, how to check nifty lot size on NSE, and how to use the Future stock list and future stock list. 

This article covers: 

• What is the Lot Size?
• How is the Lot Size set in The Futures And Options Contract? 
• Why are lot sizes modified in the futures and options market?
• How to view futures contracts on NSE?
• How to use lot size?

What is the Lot Size?

A lot size is a standard quantity of shares or commodities that an investor can buy or sell at a time. Lot size futures are traded on the National Stock Exchange of India’s (NSE) commodity and financial derivatives segment. The contract is based on the lot size in NSE.

In futures markets, the standard lot size is typically quite large, often representing tens of thousands or even hundreds of thousands of units of the underlying asset. In options markets, the lot size is typically smaller than in futures markets, since options contracts generally cover a smaller quantity of the underlying asset. The specific lot size for an options contract will depend on the underlying asset being traded and the terms of the contract.

Key Takeaways: 

• The lot size, also known as the maximum number of shares an individual can purchase or sell, is the most important factor to consider when trading futures and options.
• The lot size is set by the exchange and is typically determined by the market value of the underlying asset.
• Lot size in NSE is a measure of the number of stocks that an investor can buy or sell at a particular point in time.

How is the Lot Size set in The Futures And Options Contract? 

In India, the Securities and Exchange Board of India (SEBI) regulates the futures and options market and fixes the lot size for each contract.

In the beginning, SEBI fixed a lot size of INR 2 lakhs for futures and options contracts. This meant that the notional value of each contract, which is the product of the size of the contract and the price of the underlying asset, had to be at least INR 2 lakhs. However, in 2015, SEBI increased the indicative lot size to INR 5 lakhs to demoralize retail investors from participating in futures and options trading because of the high risk. 

Why are lot sizes modified in the futures and options market?

Lot sizes in futures and options markets can be modified for a variety of reasons. Some of the most common reasons for modifying lot sizes include:

• To accommodate different types of traders: Different traders have different risk tolerances and trading objectives, and modifying the lot size can make it easier for traders with different needs to participate in the market.
• To reflect changes in market conditions: Market conditions can change over time, and modifying the lot size can help to ensure that the market remains liquid and efficient.
• To facilitate price discovery: Modifying the lot size can help to ensure that prices reflect the true supply and demand for a particular asset, by allowing a wider range of traders to participate in the market

How to view futures contracts on NSE?

1. Go to the NSE website (https://www.nseindia.com/) and select the "Derivatives" tab
2. Click on the "Live Market" link under the "Derivatives" tab. 
3. On the "Live Market" page, you will see a list of all the futures contracts that are currently being traded on the NSE. You can use the drop-down menus at the top of the page to filter the list by market segment (e.g., equity, index, currency), the underlying asset, and the expiration date. 
4. To view the details of a particular futures contract, click on the contract's symbol in the list. This will take you to a page with more detailed information about the contract, including its underlying asset, expiration date, contract size, and more. 
5. You can also use the NSE's "Derivatives Watch" tool to view real-time quotes and other information about futures contracts. To access this tool, click on the "Derivatives Watch" link under the "Derivatives" tab on the NSE website.

You need to keep in mind that to trade futures contracts on the NSE, you will need to have an account with a brokerage firm that is registered with the exchange. You will also need to meet the exchange's requirements for margin and other risk management measures.

How to use lot size?

• Lot size futures are a way for traders to hedge risk in the agricultural commodities markets. They are contracts that allow traders to take a position on the future price of a given commodity.
• The lot size is an important factor when traders are deciding how much risk they want to take on and how much profit they want to make.
• Lot size futures allow traders to speculate on how much of an agricultural commodity will be purchased in the future at a certain price. The futures contract is set up so that if the trader buys one contract, they commit to purchasing one lot of an agricultural commodity at some point in the future at a predetermined price.

To conclude, It is important for traders to understand the concept of lot size and to be aware of the specific lot size requirements for the contracts they are trading. This can help them make informed decisions about the size of their trades and manage their risk effectively. However, traders need to seek assistance from professionals. Also, consider your risk appetite, risk management, and trading objective before trading.