Getting Started Trading Futures: Understanding Futures Contracts, Part 2

In Part 1 of this series, we covered the fundamentals of futures trading—including what a futures contract is, how trades are executed, and what markets are available. Now that you’ve got a handle on the basics, it’s time to take a closer look at the details that shape every contract. 

Understanding the specifications of futures contracts is a key part of learning how to trade futures. These details affect everything from how much capital you need to what time of day you can place trades. 

Let’s explore the core elements that make up a futures contract and how each one can impact your trading strategy. 

What makes up a futures contract specification? 

Futures contracts may be standardized, but that doesn’t mean they’re all the same. Each contract has specific attributes set by the exchange where it trades. These specifications (specs) outline how the contract functions and how traders interact with it. 

Some of the most important specs to understand include: 

• Symbology (how to identify the contract) 
• Contract size (how much of the asset is represented) 
• Tick size and value (the minimum price movement and its dollar value) 
• Expiration date and rollover timing 
• Trading session hours 
• Settlement method (cash or physical delivery) 

Let’s break each of these down. 

Symbology: Reading a futures symbol 

Every futures contract is identified by a unique ticker symbol, which typically includes: 

• The root symbol (e.g., “ES” for E-mini S&P 500) 
• A month code (e.g., “H” or “Mar” for March; “M” or “Jun” for June) 
• A year code (e.g., “6” for 2026) 

For example, ESM6 and ES JUN26 both refer to the June 2026 E-mini S&P 500 contract. 

Being able to read and interpret contract symbols helps ensure you’re trading the correct product (and the correct expiration month). 

Contract size: How big is each contract? 

Contract size defines how much of the underlying asset one contract represents. It’s a critical piece of information when evaluating trade size, margin requirements, and potential exposure. Often referred to as Big Point Value (BPV), it represents the dollars for a full one-point move. 

Here are a few examples: 

• CL (crude oil): 1,000 barrels 
• GC (gold): 100 troy ounces 
• ES (E-mini S&P 500): $50 per BPV 
• MES (Micro E-mini S&P 500): $5 per BPV 

Micro contracts, such as MES, offer smaller contract sizes, which can be helpful for those just beginning their futures trading. 

Tick size and value: Measuring price movement 

The tick size is the smallest price increment a contract can move. Each tick has a defined monetary value, which tells you how much a single tick is worth to your position. So, minimum move x BPV = the dollar value of a minimum move per contract. 

Here are some examples: 

• ES (E-mini S&P 500): 0.25 points x $50 = $12.50 per tick 
• MES (Micro E-mini S&P 500): 0.25 points x 5 = $1.25 per tick 
• CL (crude oil): 0.01 x 1000 = $10 per tick 

Understanding tick size and value helps traders measure risk and reward more precisely, which is important when setting stop-loss and take-profit orders. 

Expiration and rollover: Knowing when to switch 

Every futures contract has an expiration date, which marks the end of its trading life. Many traders are in and out of positions in a single day. While some traders may hold positions until expiration, some will roll over to the next contract to maintain market exposure. 

For example: 

• Equity index futures typically expire on a quarterly cycle, on the third Fridays of March, June, September, and December. 
• Traders often roll over well before expiration to the next active front month. 

Rolling can help avoid unwanted delivery obligations and ensure smoother transitions between contract months. 

Trading session hours: When can you trade? 

Futures markets are known for their extended trading hours, often running nearly 24 hours a day during the week. However, each product has its own session schedule defined by the exchange. 

For instance, CME Group’s equity index futures typically trade: 

• Sunday – Friday, 6:00 pm – 5:00 pm ET (with a one-hour daily break) 

Understanding when your chosen market is open can help you align with times of higher volume and volatility. 

Delivery mechanism: Cash vs. physical settlement 

At expiration, a futures contract will either: 

• Settle in cash: The difference between the contract price and final market price is paid out. 
• Settle through physical delivery: The underlying asset is delivered. 

Most retail traders avoid physical delivery by closing positions or rolling over before the First Notice Date (FND). Common cash-settled contracts include equity indices like ES, while energy and agricultural futures may involve physical delivery. 

How contract specs support your trading plan 

Knowing a contract’s specs can help you: 

• Choose contracts that fit your risk tolerance and strategy. 
• Estimate profit and loss based on tick size. 
• Plan your trades around expiration and FNDs. 
• Trade during active hours with better liquidity. 

The more you understand these elements, the more effectively you can build and refine your futures trading approach.