Lot size or Contract size
Every stock futures contract consists of a fixed lot of the underlying share; this lot is determined by the exchange on which it is traded and differs from stock to stock. For instance, a Reliance Industries Ltd. (RIL) futures contract has a lot of 600 RIL shares, i.e., when you buy one futures contract of RIL, you are actually buying 600 shares of RIL. Similarly, a lot size for Infosys Technologies is 100 shares.
Futures contracts are available in durations of 1 month, 2 months and 3 months (called near month, middle month and far month, respectively). The month in which a contract expires is called the contract month for that contract. All three maturities are traded simultaneously on the exchange and expire on the last Thursday of their respective contract months. If the last Thursday of the month is a holiday, they expire on the previous business day. In this system, as near month contracts expire, the middle month contracts become near month contracts and the far month contracts become middle month contracts. Fresh far month contracts are issued from the business day after the last Thursday of each month.
Illustration of a stock futures contract
If you want to purchase a single future of ABC Ltd. (consisting of 200 shares; contract month July), you would have to do so at the price at which ABC Ltd. July futures are currently available in the futures market. Let's say that ABC Ltd July futures are trading at Rs 1,000 per share. Since it is a contract that will expire on the last Thursday in July, you are locking in your purchase at a price of Rs 1,000 per share until the end of July. The price in the cash market at the time when you purchase the futures contract could be Rs 992 or Rs 1,005 or anything else in the vicinity of Rs 1,000, depending on the prevailing market conditions.