Purchasing Stock Futures

#1
Let's say Bank Nifty futures contract for 27-Dec was trading at 12550. Before 11:00 AM I sold futures contract at 12473. then I squared off my position by purchasing it for 12273 i.e. difference of 200 Rs. Minimum quantity of purchase is 25.

1) As intraday trader how much would I earn? I guess brokerage charged is same as that for stocks ? (I'm not sure here) Would it be calculated on (12273*25), that would be huge !

2) There is something called cost of carry written in market depth window, what does it refer to ? It is 21.84, I'm not sure if it changes in real time (intraday basis).

3) In case above transaction was for delivery and if Bank Nifty increased by 200 Rs (i.e. giving me a loss of 200 Rs however I haven't squared my position today), then, how much money will be deducted from my trading account that day ? Will it be 200*25?

Thanks.
 

Alchemist

Administrator
Staff member
#2
It seems you are very new to futures.

Please be careful. New traders can lose a lot of money in derivatives trades.

1. Yes, the brokerage for futures is calculated in the same way as for stocks.

The rates are comparable to intraday rates for stocks in the cash market.

e.g. These are the rates charged by Kotak Securities:

Low Brokerage | Brokerage Charges | Broking Charges - Kotak Securities

2. "Cost of carry" is not a real cost, but an implied cost.

Usually prices of futures trade at a premium to the prices of underlying securities.

The difference between the price of futures and the price of the underlying is the "cost of carry".

The cost of carry on NSE's site is annualized and expressed as percentage of price of the underlying security.

(I have simplified the cost of carry. NSE's site uses compound interest formula to calculate the cost of carry).

3. (Initial Margin + MTM loss) will be deducted.

Whenever you take a position in futures market, a margin amount is blocked.

You can read more about margins here:

http://www.nseindia.com/invest/resources/download/futidx_invguide.pdf

The initial margin serves as a security deposit, which in turn the broker has to pay to the exchange. Your positions in the futures market will be revalued or "marked-to-market" everyday. This is done by the exchange to assess the value of your positions on a daily basis. If the market value of your position shows a loss, then you would be required to pay the difference. Similarly, in case your position has gained in value, you will be paid the profit amount.
 
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