Contract Specifications, Lot Size & Expiry

The Wedding Bus Nobody Could Cancel

Kavya's cousin was getting married in Kolhapur, and half the family was going together — one bus, one hotel, one bundled package that Nikhil's uncle had arranged for everyone.

"Just pay your share and send your name," Nikhil told her over the phone. "Uncle's handling everything."

Kavya transferred her ₹6,000 the same evening, without opening the booking link he'd sent. It looked like every other trip she'd taken — pay, travel, done. She'd cancelled bus tickets before with a click and gotten her money back within a day. This felt no different.

Ten days before the wedding, her father fell ill and she couldn't go. She called Nikhil, expecting a quick refund.

"Kavya... did you read the booking?" he asked carefully. "There's a line in there. No cancellations after the 15th. Uncle mentioned it in the group message too, actually."

She scrolled back. There it was — in the same message where he'd shared the link, and again in the booking's terms. A date. A rule. Sitting there the whole time, waiting for nobody to notice it until it mattered.

"I just saw the price and paid," she admitted. "I didn't think there'd be anything else to check."

Nikhil didn't say much. He didn't need to. The ₹6,000 was gone, not because anyone had cheated her, but because she'd agreed to something she'd never actually looked at.

That evening, scrolling through the same chat where the booking link still sat, unread lines and all, Kavya found herself wondering — how many other things had she said yes to, this same way, without once checking what she was actually agreeing to?

• Identify the three fixed specifications of a futures contract — lot size, expiry date, and tick size — on a real contract listing.
• Explain in plain language what each specification tells you: how much, until when, and in what price steps.
• Recognize that these specifications are standardized by the exchange and cannot be negotiated or changed by the trader.
• Connect the idea of contract specifications to familiar everyday agreements to remove the feeling of unfamiliar jargon.

Kavya's ₹6,000 didn't disappear because someone tricked her. It disappeared because the rule was sitting in writing, and she never went looking for it. A futures contract works the same way — before you look at price or think about profit, there's a small set of fixed facts written into the contract, waiting to be read.

A futures contract on the exchange always comes with three fixed details, called its specifications. Nobody negotiates these — not you, not the person on the other side of the trade. The exchange sets them in advance for everyone, the same way a wedding package has a set price and a set cutoff date that every guest agrees to, not just Kavya.

The first is lot size — how much you're committing to. Just like a bus package isn't sold "per seat, half a seat, whatever you like," a futures contract isn't sold in whatever quantity you feel like. It comes in a fixed minimum bundle called a lot. If the lot size is 25, you trade in 25s, 50s, 75s — never 10, never 12.

None of these are new ideas — you already know "how much," "until when," and "in what steps."

The second is expiry date — until when the promise lasts. A wedding booking doesn't run forever; it's tied to a specific event. A futures contract is the same — it has one fixed date on which the agreement ends and must be settled or closed. There's no "whenever you feel like it."

The third is tick size — in what steps the price can move. Think of it like a lift that only stops on certain floors — it can't pause in between. A tick size of 0.05 means the price can move to 100.05 or 100.10, but never to 100.07. Price changes always happen in these fixed jumps.

None of these are new ideas for you. You already understand "how much," "until when," and "in what steps" from ordinary life — rent agreements, chit funds, group trips. The exchange has simply written these into a document called a contract specification, using precise numbers instead of casual understanding.

Here's the shift that matters: reading these three details isn't extra homework — it's the same self-respect Kavya wished she'd shown before paying her ₹6,000. A standardized contract means the fine print is fixed and knowable in advance — so there's no excuse for skipping it, because it's sitting there in plain view, waiting for anyone who bothers to look.

A few weeks after the wedding, a colleague mentions futures trading to Kavya, excited about how fast the Nifty had moved that day. Her first instinct is to picture the profit. Her second instinct — new this time — is to picture the booking link she never opened.

So instead of asking "what's the price doing," she opens the Nifty futures contract listing and looks for the specification sheet first, the same way she now wishes she'd looked at the wedding terms.

She finds three lines: Lot size 65. Expiry date the last Tuesday of the month. Tick size 0.05.

She reads them slowly, on purpose. Lot size 65 means she can't buy 10 units or 30 units — only whole multiples of 65, the same way the wedding package wasn't sold "per half-seat." Expiry date last Tuesday means this contract's promise doesn't run forever — it ends on that specific day each month, and has to be settled or closed before then, exactly like the wedding's non-refundable cutoff sitting quietly in the terms. Tick size 0.05 means the price will only ever move in steps of 0.05 — never landing in between, like a lift stopping only at certain floors.

(These exact figures, like most contract specifications, are set by the exchange and revised from time to time — lot sizes especially get updated every so often. The habit that matters is checking NSE's current contract listing before you trade, not memorizing today's numbers.)

Kavya hasn't decided to trade anything yet. She's just done the one thing she skipped last time — she's read what she'd actually be agreeing to, calmly, before the price could pull her attention anywhere else.

Point: Reading a contract's fixed specifications before reacting to price is the same everyday habit as reading a booking's terms before agreeing — it turns unfamiliar jargon into known facts.

• Assuming lot size, expiry, and tick size are complicated financial jargon meant only for experts. — The words look unfamiliar and appear on official exchange documents, so learners assume the ideas behind them must be equally technical. Fix: Remind yourself these are just labels for things you already understand — how much, until when, and in what steps — from everyday agreements like rentals or group bookings.
• Believing you can trade any quantity you want in a futures contract, like buying a single share of stock. — Learners are used to buying stocks one share at a time, so they assume futures work the same flexible way. Fix: Check the lot size first — futures only trade in fixed multiples of that lot, never in smaller or partial amounts.
• Thinking that once you understand lot size, expiry, and tick size, you're ready to safely trade futures. — Once the unfamiliar words stop feeling scary, it's easy to mistake that relief for real readiness. Fix: Treat this as reading literacy, not trading skill — it removes confusion about the contract's terms, but the risks and mechanics of actually trading still need to be learned separately.

• A futures contract has three fixed specifications: lot size (how much), expiry date (until when), and tick size (in what steps).
• These specifications are set by the exchange in advance — no trader can negotiate or change them.
• Lot size, expiry, and tick size aren't new ideas — they're familiar concepts from everyday agreements, just given precise labels.
• Reading a contract's specifications before looking at price is what turns an intimidating listing into a set of known facts.
• Understanding these terms is basic contract literacy, not the same as knowing how to safely trade futures.

Q1. On a futures contract, which of these three details are you always able to find, fixed in advance by the exchange?

• Lot size, expiry date, and tick size
• Lot size, broker's fee, and expiry date
• Trader's margin, tick size, and profit target
• Expiry date, brokerage commission, and lot size negotiated per trader Answer: Lot size, expiry date, and tick size — Every futures contract comes with three fixed specifications set by the exchange: lot size (how much), expiry date (until when), and tick size (in what steps). These don't change trader to trader.

Q2. A futures contract has a lot size of 25. What does this tell you?

• You must trade in whole multiples of 25, never a smaller or partial amount
• You can buy anywhere from 1 to 25 units, similar to buying shares
• 25 is just the price of one unit of the contract
• You can only hold the contract for 25 days before it expires Answer: You must trade in whole multiples of 25, never a smaller or partial amount — Lot size sets the minimum quantity you can trade, and you can only trade in whole multiples of it — you cannot buy or sell a fraction of a lot, unlike buying single shares of stock.

Q3. True or False: The lot size, expiry date, and tick size of a futures contract can be negotiated between the buyer and seller before the trade. Answer: False — These specifications are standardized by the exchange in advance and apply to everyone equally — no trader can negotiate or change them, the same way every guest in a group booking agrees to the same fixed terms.

Q4. Rohan is about to look at a new futures contract listing for the first time. Following the habit of reading the fine print before acting, what should he do before he looks at the price or thinks about a trade idea?

• Locate and read the lot size, expiry date, and tick size on the listing
• Ask a friend what they think the price will do next
• Check how much profit similar contracts made last month
• Wait until the expiry date passes before checking anything Answer: Locate and read the lot size, expiry date, and tick size on the listing — The habit this unit builds is checking the contract's fixed specifications — how much, until when, and in what steps — before reacting to price, just as Kavya learned to do after her wedding booking surprise.

Q5. A trader wants to place a limit order at ₹100.07 on a contract with a tick size of 0.05, thinking: "That's close enough to a round number, it should work." Will this order actually be accepted at that exact price? Reveal: Weak: yes, close enough should be fine. Strong: tick size is a hard rule, not a suggestion — a contract with tick size 0.05 can only trade at exact multiples of 0.05; ₹100.07 isn't a valid price at all, regardless of how close it looks to a round number.