Find the fair (theoretical) price of a future, compare it with the market to see the basis, and work out profit or loss. For learning only.
Futures use leverage — a small price move is magnified. SEBI data shows most individual derivatives traders lose money.
A future is an agreement to buy or sell something at a set price on a future date. Its fair price isn't a guess — it follows from the spot price, interest rates and dividends.
The theoretical price comes from the cost-of-carry idea: Fair = Spot × e(r − q) × T, where r is the risk-free rate, q the dividend yield, and T the time to expiry in years. The basis is the actual futures price minus the spot. A future trading above fair value is at a premium (contango); below is a discount (backwardation), which often signals bearishness or high dividends.
P&L = (exit − entry) × lot size × number of lots, and the reverse for a short. Because one lot controls a large notional value, gains and losses are amplified — which is exactly why futures are risky.
If the market future is far from fair value, there's usually a reason (dividends, demand, cost of funding) — it's rarely free money once costs are included. Treat leverage with respect: size positions small.
Read: Futures fair value, basis, contango & backwardation →Educational tool only, not investment advice. Investments and derivatives carry market risk; most individual F&O traders lose money.