Definition
The term contract size identifies this approximate amount of a product or collateral called the underlying advantage in a futures or options contract. The deliverable quantity, and so the contract dimensions, for both futures and options contracts are standardized nevertheless vary in line with the underlying advantage.
Explanation
The contract size is also an essential factor to comprehend when inputting an options or futures contract. This value not just defines the deliverable volume, but is also directly related to the dollar price of this trade. As the deliverable quantity can vary greatly with the underlying advantage, there’s a norm for each asset form. By way of instance, the contract size to get an equity option is 100 shares of stock.
The trading platform for agricultural futures is on average 5,000 bushels, whereas the trading platform for Commodities futures is 40,000 lbs. The trading platform for weather futures is 20.00 days the cooling index, whatever location. While all contract components are conventional for a specific product, it can fluctuate within a category of merchandise. By way of instance, the contract size for golden is currently 100 troy oz, whilst the contract size to get top tier aluminum is 25,000 lbs.
