Question 1

How much margin is required to trade in Banknifty futures?

Accepted Answer

The margin required to trade in Banknifty futures depends on contract value, volatility and the exchange-mandated margins. The margin includes SPAN margin and exposure margin, which is decided by the exchange and updated daily. The total margin is not fixed, it may increase during high volatility or around major corporate events like earnings.

Question 2

How is the margin for Banknifty futures calculated?

Accepted Answer

The margin for the Banknifty futures is calculated using a risk-based system comprising SPAN margin and exposure margin. Total margin = SPAN margin + Exposure margin. SPAN margin covers potential losses in uncertain scenarios, and the exposure margin provides additional safety.

Question 3

Are Banknifty futures better than index futures?

Accepted Answer

Banknifty futures and index futures serve different objectives. Banknifty futures are ideal for those looking for stock-specific opportunities and higher volatility. Whereas index futures offer diversification and lower risk compared to stock futures, as they track a basket of shares. Banknifty futures may deliver higher returns, but also carry a higher risk compared to index futures.

Question 4

Can I exit a Banknifty futures before expiry?

Accepted Answer

Yes, you can exit Banknifty futures at any time before expiry by an opposite trade (sell if you bought, buy if you sold). Most traders close the trade before expiry to avoid demat settlement obligations.

Question 5

Who should invest in Banknifty futures, beginners or experienced traders?

Accepted Answer

Banknifty futures are best suited for experienced traders who understand the working mechanisms of derivatives. As they are familiar with terms like leverage, margin, and risk management. Beginners should gain experience with cash market stocks and index instruments before putting money in stock futures.

Question 6

What happens if I hold Banknifty futures till expiry?

Accepted Answer

If you hold Banknifty futures till expiry, the contracts are settled at a final settlement price determined by the exchange on the expiry day. Any profit or loss is credited or debited to your trading account on settlement day. However, the traders who wish to take delivery must keep a cash balance in the trading account to meet the physical settlement obligations.

Question 7

Is the Banknifty futures settlement cash settled or physically settled?

Accepted Answer

Banknifty futures contracts are physically settled. It means buyers must take the delivery of shares on expiry, and sellers must deliver shares from their demat account. Adequate funds and or shares must be available to avoid penalties at the time of final settlement.

Future Name	Current Price	Change %	Volume	Average Traded	OI

Banknifty Futures

FAQs