Understand futures exposure, margin, leverage, basis, rollover, hedging, liquidity and expiry before expressing a market view.
Framework • Evidence • Risk • Review
Futures make market exposure efficient, but efficiency is not the same as limited risk. This research pillar explains contract value, margin, basis, expiry, rollover, hedging and position sizing so a futures decision remains connected to both the thesis and the capital boundary.
The lot size and futures price determine the notional exposure controlled by a contract. That value can be much larger than the margin blocked, which is why margin should never be treated as maximum loss.
The difference between futures and spot can reflect financing, dividends, demand and time remaining. Basis can narrow into expiry, and rolling a position introduces a new contract price and spread.
Price and open-interest changes can describe participation, but they do not reveal every participant's motive. Hedging, spreads and multi-leg positions prevent simple labels from becoming certain signals.
Overnight events can move futures beyond a planned stop, while volatility can increase margin. Quantity should allow for these uncertainties rather than assuming ideal execution.