New contacts in the stock will not be issued if any security does not meet eligibility norms for continuous three months. It may decide to close all positions in the futures contract compulsorily if the exchange thinks that continuing a stock is harmful to the market.

The price of a futures contract is decided according to the principle of cost-of-carry. But the evidence observed is not uniform. It is seen that the concept of cost-of-carry does not remain the same over a period. It keeps changing every week or even every day.

Three futures contracts are available for trading at any time. In theory, these contracts would be priced based on the cost-of-carry principle. Therefore, the price of a far month futures contract would be higher than near months contracts.

Hedging is the primary use of futures. It protects the investors from the unfavorable movement in price. However, it also stops the hedger from engaging in highly favorable changes in price. Hedging decisions need expertise and experience.

To enter into a futures contract, one has to pay margin money. There are two types of margin. One is the initial margin, and the other is the daily margin. The initial margin takes care of the potential loss for the day. The margin percentage differs for every stock and is based on the risk in the share. It depends on the market conditions in general and the volatility and liquidity.

The difference in cost of position and the market value is calculated daily. In case of a loss, an additional margin must be remitted every day.

A person cannot enter into any number of future contracts. There are limits at all levels - whether they are a client, a trading member, or the market as a whole. As a measure to control excess speculation, these open position limits are specified by exchanges every month.

Keeping the base price as the daily settlement price, the price range of a futures contract should be within 20% above or below the base price. The exchange will freeze orders that are out of this range.

SEBI has specified the maximum quantity in a stock futures contract. The number of individual stocks in a futures contract is decided by the exchange periodically. The theoretical value of a single order usually does not exceed Rs.5 crores. The theoretical value is the lot size multiplied by the future price.

Corporate actions have an impact on the futures contracts, and appropriate adjustments have to be made. (corporate-actions include splits, amalgamation, and mergers in addition to the bonus, rights, and dividends.)

The closing price of the underlying asset would be the settlement price of the futures contract and are settled by cash.