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The Importance of Futures Contract Specification

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Gold Futures Contract Specifications

When you look at a futures contract specification, for example, gold futures on CME, you ‘ll see that it specifies the type of the commodity or the underlying instrument being traded, its quantity and quality as well as the delivery time and location, among other things. The only thing that is left out from the contract is the price.

As it is crucial for a futures trader to understand the futures contract specification, let’s take a look at decoding the contract in details.

Ticker Symbols

Each futures contract has its own symbol. For example, the symbol for gold futures is GC while cotton futures‘ symbol is CT.  The standard formula for a complete futures ticker symbol is a ticker symbol that is followed by symbols for the contract month and the year.

For example, the ticker symbol for coffee futures is KC. The complete ticker symbol for June 2012 Coffee Futures would be – KCM12 where KC is the product symbol, M is for June (the contract month) and 12 is for the year.

Contract month symbol:

Symbol Month

























Tick Size (Minimum Fluctuation)

Tick size is the smallest allowable increment of price movement for a futures contract. It is also referred to as Minimum Price Fluctuation.

The value of a tick is determined by the following calculation:

Tick Value = Contract Size x Tick Size

Let’s use gold futures as an example. The contract size of gold futures is 100 troy ounces and tick size in gold would be 10 cent.

Example:  100 x $0.10 = $10

Therefore, every time you see the price of gold move up or down 10 cent, you know that means it’s a $10 move. A 50 cent move in the price of gold would mean it is worth $50 if you are trading one contract of gold futures.

Gold futures is traded on Chicago Mercantile Exchange

Contract Size

Contract size specifies the amount of the underlying instrument you are trading. Contract sizes are determined by the futures exchanges where the futures contracts are traded on.

For example, the contract size for gold futures is 100 troy ounces. Buying one contract of gold futures is the equivalent of buying 100 troy ounces of gold. If the price of gold moves $1 higher, that will affect the position by $100 ($1 x 100 ounces). Each futures contract has different contract sizes, depending on the futures exchanges they are traded on.

Contract Months

Also called delivery months, a contract month indicates the expiration of a futures contract whereby physical delivery of the actual commodity will take place upon contract expiration (for contract that calls for physical delivery).

For example, a July coffee futures contract means that in July, someone will be delivering 10 metric tons of coffee while someone else will be taking delivery of the coffees. Some futures only have a few delivery months while others have all 12 months. The contract will expire after the designated date in the contract month.

Futures contract settlement: physical delivery or cash?

Settlement: Physical Delivery or Cash?

There are two types of settlements for futures contract: physical delivery (usually of commodity types) and cash settlement. The contract will specify the month during which delivery or settlement is to occur. For example, a March futures contract is providing for delivery or settlement in March. 

Bear in mind that a futures contract that call for physical delivery may not result in actual delivery itself. Many traders would buy or sell futures contracts prior to the delivery date to realize their profits or loses. These are typically speculators who are in for the money and have no intention of taking actual delivery. Therefore, it can be say that physical delivery on futures contracts is an option, rather than a rule.  

Knowing and understanding futures contract specifications is crucial for futures traders before starting to trade in futures to avoid bleeding money from their accounts. Learn more about contract specifications for the following local and world derivatives markets here:


Wan Zuraiha Wan Zakaria is a staff writer at Oriental Pacific Futures (OPF) where she writes on investment and trading. OPF is a futures and options broker based in Kuala Lumpur, Malaysia and provides electronic trading, brokerage and clearing services to retail and institutional traders since 2007. OPF is licensed under the Securities Commissions of Malaysia and offers cash-settled derivatives instruments traded on Bursa Malaysia, as well as select major derivatives exchanges around the world.

Oriental Pacific Futures articles published on the Corporate Website ( may be reprinted, reposted or distributed free for educational purposes only on the condition that Oriental Pacific Futures and the Corporate Website link information are included. However, other organizations are invited to link to articles that are available in the public area of the Oriental Pacific Futures’ Learning Resources website. No additional permission is needed for such a link.