The contract specification
Lot size, strike, expiry and settlement are set by the exchange, not by you. SEBI raised contract sizes and cut the number of weekly expiries in 2024 and 2025, and both changes were aimed squarely at retail participation.
Chapter 4 · Beginner
Chapter 2 noted that a futures contract is standardised. This chapter is what that means in practice, and why the standard was changed.
What the exchange fixes
The underlying. Which index or share the contract is on.
The lot size. You cannot buy one unit. Contracts trade in lots, and the lot is set by the exchange. This is the single most consequential specification for an individual, because it sets the smallest position you can take.
The strike prices, for options. A ladder of strikes at fixed intervals around the current level. You choose from the ladder; you do not name a strike.
The expiry. A fixed date, and the contract ceases to exist after it.
The settlement method. Cash settled, or settled by delivery of the underlying. Index derivatives are cash settled — there is no index to deliver, so the difference is paid.
You choose two things: which contract, and at what price you are willing to trade it. Everything else is given.
Lot size is the floor
Worth isolating, because it is where most individuals meet the specification.
An index at 24,000 with a lot of 75 means one contract represents ₹18,00,000 of the index. That is the minimum. There is no half lot.
So the question "how much should I risk on this view?" has a lower bound set by the exchange, and for many people that bound is already larger than any sensible single position. Chapter 5 explains why the margin you post is far less than ₹18 lakh — and why that does not make the position smaller.
SEBI changed this deliberately
The specifications moved in 2024 and 2025, and the direction of travel says what the regulator was worried about.
From SEBI's own table of measures introduced by the circular of 1 October 2024:
Increased contract size for index derivatives, effective on NSE from 2 January 2025 and on BSE from 10 January 2025. A larger minimum contract raises the floor on what one position costs.
Rationalisation of weekly index derivatives products, from 20 November 2024, and of monthly products from January 2025 — with the result that each exchange's index derivatives expire on a single day of the week: BSE on Tuesday, NSE on Thursday, MSE on Friday.
Before that, multiple weekly expiries meant an expiry almost every trading day, and chapter 7 explains why the final day of an option's life is where the most dramatic percentage moves happen. Reducing the number of expiries reduces the number of those days.
Upfront collection of option premium from buyers, from 10 February 2025 — the buyer pays when they buy rather than later.
Increase in tail risk coverage on the day of options expiry, from 20 November 2024, and removal of calendar spread treatment on the expiry day.
Read together, these are measures to make the contracts larger, the expiries fewer and the margining stricter on the day risk is highest. SEBI's stated concern, quoted in chapter 1, was "investor protection & systemic stability" after "an explosion in index options trading on expiry day".
Chapter 10 reports what happened to participation afterwards.
Expiry, and why it concentrates risk
Every contract has one, and as it approaches, two things happen at once.
Time value drains. Chapter 7: the part of an option's premium that pays for the possibility of future movement shrinks towards zero, fastest at the end.
Small moves in the underlying produce enormous percentage moves in the option. An option worth ₹5 going to ₹20 is a 300% gain on a tiny absolute number, and the same option going to zero is a total loss. Both happen within hours.
This is why expiry-day trading attracts people and why it is where the most money is lost quickly. The percentage swings are real and they are percentages of a number designed to be small.
Reading a contract's name
Indian contracts are named by underlying, expiry, strike and type — the index, the date it expires, the strike price, and CE for a call or PE for a put.
Knowing the convention is worth two minutes because it makes explicit what is implicit: every one of those contracts has a date on it, and after that date it is nothing.
The point
The exchange fixes the underlying, lot size, strike ladder, expiry and settlement; you choose the contract and the price. Lot size sets a floor on position size that is often larger than it looks. SEBI raised contract sizes and cut expiries to one per exchange per week in 2024 and 2025, after an explosion in expiry-day index options trading.
Check yourself
4 questions. Every answer is explained afterwards, including the ones you get right — guessing correctly is not the same as knowing. Score 70% or more and the chapter is marked done.
Question 1 of 4
0 of 4 answered. You can submit with questions unanswered — they simply score zero.
Now do it with your own numbers
Find the current lot size for one index derivative and multiply by the index level. That is the smallest position you can take. Compare it with what you would consider a sensible single position in shares.
There is no smaller size. The minimum contract value is a deliberate floor, and SEBI raised it in January 2025.
Sources
- SEBI, "Comparative study of growth in Equity Derivatives Segment vis-à-vis Cash Market after recent measures", July 2025 — Table 1, the measures introduced by the circular of 1 October 2024, including increased contract size for index derivatives and rationalisation of weekly and monthly index derivative products with one expiry day per exchange — read 2026-10-01
- SEBI investor education — Understanding Derivatives: that a futures contract is standardised and exchange traded — read 2026-10-01