Lesson 1 / 3
Know the contract before the trade
Identify an index derivative from its full contract and the applicable specification.
NIFTY, BANK NIFTY and SENSEX name underlying indices. The underlying name alone does not identify an options contract. Record the exchange, instrument type, expiry and contract identifier; an option also needs its strike and call or put type.
Check the exchange contract specification and your broker's instrument file for the relevant trading date. Keep the source, publication or effective date, and a copy or reference with your notes. Lot sizes, expiry conventions and available contracts can change, so a remembered value is not a reliable calculation input.
- Separate the underlying, the derivative contract and each execution.
- Confirm whether quantity is reported as lots or individual units.
- Record the applicable lot size, price convention and settlement terms from a dated source.
Try it
Take one past trade. Write its complete contract identity and identify the dated source you would use to validate quantity and contract terms. Mark any missing fields as unknown.