The price of a futures contract is theoretically determined by the cost-of-carry principle. However, in practice, the evidence suggests that this principle does not always hold, and the cost-of-carry changes daily or weekly.

At any given time, three futures contracts are available for trading, with different expiration dates. According to the cost-of-carry principle, the price of a futures contract with a farther expiration date should be higher than those with nearer expiration dates. However, this theory does not always play out in reality

The main purpose of futures contracts is hedging, which protects investors from potential price drops. However, it also means hedgers miss out on significant price increases. Hedging requires expertise and experience to make informed decisions.

To enter into a futures contract, investors must pay margin money, which comes in two forms: initial margin and daily margin. The initial margin covers potential losses for the day, and the margin percentage varies depending on the stock's risk profile, market conditions, volatility, and liquidity. This means that different stocks have different margin requirements

Daily, the difference between the position cost and market value is calculated. In case of a loss, an additional margin must be paid daily.

There are limits on the number of future contracts that can be entered into, at the client, trading member, and market levels. Exchanges set these open position limits monthly to control excess speculation.

The price range of a futures contract is limited to 20% above or below the base price (daily settlement price). Orders outside this range are frozen by the exchange.

SEBI has specified the maximum quantity in a stock futures contract, and the exchange decides the number of individual stocks in a futures contract periodically. The theoretical value of a single order is usually limited to Rs. 5 crores (lot size multiplied by future price).

Corporate actions (splits, amalgamation, mergers, bonuses, rights, and dividends) impact futures contracts, requiring adjustments. The settlement price of the futures contract is the closing price of the underlying asset, settled in cash.