- These are centrally traded in an exchange and you need not know the opposite party.
- These are standardized in terms of market lots and expiry dates.
- These are highly liquid.
- No counter-party risk as the clearing corporation assumes the risk.
- Not necessary to hold until maturity or expiration.
A futures contract holder assumes rights as well as obligations to honour the terms of the contract.
The futures contracts can terminate into delivery or can be offset by entering into opposite trade. 99% of the futures contracts do not result in delivery.
In India, mainly we have index futures on the BSE Sensex and the NSE Nifty.
Also we have individual stock futures.