How to trade futures on Kite (first time)

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This guide walks through placing a futures trade on Kite for the first time. Futures are standardised exchange-traded contracts to buy or sell an underlying asset at a fixed price on a specific expiry date. On Indian exchanges, equity futures are settled daily on a mark-to-market basis and finally settled (cash or physical) on expiry. This guide covers the mechanics of executing the trade; for the regulatory and margin framework see F&O segment on Zerodha.

Understanding the futures contract specification

Before placing the first trade, read the contract specification. On the NSE website (nseindia.com → Derivatives → Equity Derivatives → Contract Specifications), you can look up:

  • Lot size, for Nifty 50 futures, the lot size increased to 75 units per lot after SEBI’s October 2024 circular on contract size (SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/120). Bank Nifty lot size is 30. Stock futures lot sizes vary and have been revised upward to meet SEBI’s minimum notional contract value requirement of approximately ₹15 lakh.
  • Expiry, monthly contracts expire on the last Thursday of the expiry month. For index futures, weekly contracts exist but are separate from monthly contracts.
  • Settlement, index futures (Nifty, Bank Nifty) are cash-settled. Stock futures are physically settled, meaning delivery of shares occurs if a position is held to expiry. See How to physically settle an ITM option for the mechanics of physical settlement.
  • Tick size, the minimum price movement; for most equity futures this is 0.05 rupees per unit.

Step-by-step procedure

Enable F&O segment

Go to console.zerodha.com → Account → Segments. If the F&O segment shows as inactive, click Activate. Zerodha requires income proof (ITR, salary slip, or bank statements) and may require net worth declaration depending on account type. Activation is usually instant if documents are already on file.

If the F&O segment is already active, this step can be skipped.

Search for the futures contract

On Kite web, click the search bar (top centre) or press the forward slash key / as a keyboard shortcut. Type the underlying symbol, for example:

  • NIFTY for Nifty 50 index futures
  • BANKNIFTY for Bank Nifty futures
  • RELIANCE for Reliance Industries stock futures

In the search results, the exchange column distinguishes between:

  • NSE, equity shares (cash market)
  • NFO, NSE Futures and Options contracts
  • BFO, BSE Futures and Options contracts

Select the NFO result showing FUT and the desired expiry date. Common expiry naming: NIFTY24NOV FUT for the November 2024 monthly expiry Nifty future.

Add to marketwatch

Click the + icon to add the futures contract to a marketwatch list. The Kite marketwatch shows six columns by default: LTP (last traded price), change from previous close, bid/ask, volume, and OI (open interest). OI is specific to futures and options and indicates the total number of outstanding contracts; rising OI with a rising price is a classic sign of fresh long positions.

Open the buy or sell order form

Hover over the contract row in marketwatch. A set of action buttons appears: B (buy/long) and S (sell/short). Click the appropriate button. The order form slides open on the right.

For futures:

  • Buy = going long; you profit if price rises.
  • Sell = going short; you profit if price falls. Short futures require no shares in the demat. The margin structure is identical for longs and shorts.

Fill in the order form

Product type:

  • NRML, overnight position, held through market hours and carried forward until you exit or until expiry. Requires full SPAN + ELM margin. Eligible for MTM settlement and physical delivery on stock futures.
  • MIS, intraday only; must be squared off before 3:25 PM IST. Zerodha charges approximately 50 percent of NRML margin for MIS. Auto-square-off penalty applies if not closed manually.

Order type:

  • Market, fills at the best available price immediately. Suitable for liquid contracts like Nifty and Bank Nifty, where the bid-ask spread is typically 0.05–0.10 points.
  • Limit, fills at your specified price or better. Use for illiquid stock futures where the market order may cause significant slippage.
  • SL (Stop-Loss Limit), triggered at the trigger price, then placed as a limit order. Protects against gap-down (for longs) or gap-up (for shorts).
  • SL-M (Stop-Loss Market), triggered at the trigger price, then placed as a market order. Guarantees fill but not price.

Quantity: Enter in lots. One lot = the contractual lot size (for example, 75 for Nifty). The form shows the monetary value of the trade (quantity × lot size × LTP) and the margin required.

Disclosed quantity: Leave blank for most trades. Disclosed quantity shows only a portion of the total order size to the market and is useful for large institutional orders to minimise market impact.

Validity:

  • Day, order expires at end of session if unfilled.
  • IOC (Immediate or Cancel), executes immediately for any available quantity; remainder is cancelled.

Place the order

Click Buy (blue) or Sell (red). A confirmation screen shows the order details. Review and confirm. The order appears in the Orders tab showing: order ID, instrument, product, order type, quantity, price, status (open, complete, rejected).

For market orders on liquid contracts, the fill is near-instantaneous. For limit orders, the order waits in the exchange order book until a matching sell (or buy) exists at your price.

Monitor the position

In the Positions tab, the futures position row shows:

  • Day P&L, profit or loss since 9:15 AM today, calculated at LTP.
  • P&L, unrealised P&L measured against the previous day’s settlement price (for NRML positions held overnight) or against the average buy price (for positions opened today).
  • Average price, the weighted average price at which you are long or short.
  • LTP, the live last traded price of the contract.
  • OI, open interest change (shown in some views).

For NRML positions, the exchange MTM-settles the position daily. At end of day, your account is credited or debited the difference between the closing price and the previous settlement price, in cash. This means unrealised losses reduce available margin daily, which can trigger a margin call even if you have not exited.

Exit the position

To exit, hover over the position row and click Exit. An order form pre-filled with the opposite direction and the same quantity appears. Confirm and submit. Alternatively, place an offsetting order manually from the marketwatch.

Before expiry: For stock futures, exit at least two days before expiry if you do not intend physical delivery. See How to roll over an F&O position if you want to continue the position in the next expiry. See How to avoid physical settlement for the close-out procedure.

What can go wrong

  • Insufficient margin at order time. The SPAN parameters can change between the pre-trade calculator estimate and actual order placement. If margin is insufficient, Kite rejects the order with an “RMS: Margin limit exceeded” message. Add more funds or reduce quantity.
  • Auto-square-off of MIS position. If you forget to close an MIS futures position before 3:25 PM, Zerodha’s RMS squares it off at market price and charges a ₹50 per order auto-square-off penalty.
  • Physical settlement on stock futures at expiry. Any open stock futures position at expiry (both long and short) is physically settled. Long futures result in an obligation to receive shares; short futures result in an obligation to deliver shares. Ensure shares are available in the demat (for short delivery) or funds are available for the full notional value (for long delivery) well in advance.
  • Circuit limit hit. If the underlying hits its daily circuit limit, futures trading is halted. Orders placed during the halt are queued or rejected.
  • Position showing under F&O instead of Positions. Multi-day positions appear under the F&O sub-tab in Positions, not under Day. Day positions shows only intraday trades from the current session.

References

  1. Zerodha support article: “What are futures and how do they work?”, support.zerodha.com.
  2. NSE Futures and Options contract specifications, nseindia.com/products/content/derivatives/equities/contract_specification.htm.
  3. SEBI Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/120 dated October 2024, Rationalisation of weekly index derivatives contracts and revision of minimum contract size.
  4. SEBI Circular SEBI/HO/MRD/DP/CIR/P/2018/167, Physical settlement of stock derivatives.
  5. Zerodha brokerage schedule, zerodha.com/charges.
  6. NSE circular on daily MTM settlement for futures, NSE/FAOP series.

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The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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