Article

Difference between Cash and Future Market

20 Jun 2017 Prasanth Menon

BASIS FOR COMPARISON CASH MARKET FUTURE MARKET
Meaning A place where financial instruments are traded, wherein the delivery of stock takes place. Future market is a place where only future contracts are bought and sold at an agreed date in the future and at a predefined price.
Ownership When you buy shares and take delivery, you become shareholder of the company till you hold the shares. You can never be a shareholder when you trade in Futures.
Delivery It is done on T+2 days. No delivery takes place as the Future contract expires on expiration date.
Payment Full amount needs to be paid at the time of buying shares in cash. Only margin money requires to be paid for initiating Future contract.
Lot size One can buy even single share of company. One has to buy a minimum lot size which is already defined. Such as in case of NIFTY lot size is 75.
Holding period In cash market you can buy shares and hold for life. In futures, you have to settle the contract on the expiration date i.e. maximum of three month.
Dividends When you are shareholder of the company, you are entitled to receive dividend. In future contract you are not entitle for any dividend.
Objectives People buy shares in cash market for investment purpose Futures can be traded for Arbitrage, hedging or speculation purpose.

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Difference between Cash and Future Market

20 Jun 2017 Prasanth Menon

BASIS FOR COMPARISON CASH MARKET FUTURE MARKET
Meaning A place where financial instruments are traded, wherein the delivery of stock takes place. Future market is a place where only future contracts are bought and sold at an agreed date in the future and at a predefined price.
Ownership When you buy shares and take delivery, you become shareholder of the company till you hold the shares. You can never be a shareholder when you trade in Futures.
Delivery It is done on T+2 days. No delivery takes place as the Future contract expires on expiration date.
Payment Full amount needs to be paid at the time of buying shares in cash. Only margin money requires to be paid for initiating Future contract.
Lot size One can buy even single share of company. One has to buy a minimum lot size which is already defined. Such as in case of NIFTY lot size is 75.
Holding period In cash market you can buy shares and hold for life. In futures, you have to settle the contract on the expiration date i.e. maximum of three month.
Dividends When you are shareholder of the company, you are entitled to receive dividend. In future contract you are not entitle for any dividend.
Objectives People buy shares in cash market for investment purpose Futures can be traded for Arbitrage, hedging or speculation purpose.