Before trading a futures contract
A few things to consider before trading your first futures contract are the specifications of the contract itself (contract specs), the symbol, the settlement type and expiration, whether a contract is active, the commissions and fees, and the trading hours.
Contract specs
The specifications of a futures contract, or "contract specs," include the size, price movement, margin requirement, and last day to trade. It's important to be aware of the contract specs before placing a trade.
The contract size specifies the quantity of the underlying futures product for a single contract. Contract size is the same as the contract multiplier (if you’re used to trading options), except the contract size reflects what the contract is measured in. Depending on the product, a futures contract may be measured in pounds, barrels (oil), bushels (wheat), ounces, gallons, index points, and more.
While the unit of measurement may vary, futures products have standardized quantities of measurement. For example, a single crude oil (/CL) futures contract always corresponds to 1,000 barrels, and a single gold futures contract equates to 100 troy ounces.
Some contract sizes are also related to one another. For example, /MCL is 1/10th the size of /CL (crude oil). The M in this case stands for “micro.”
A contract’s price movement is determined by its contract multiplier, tick size, and tick value.
The contract multiplier is the dollar value of each full point (1.00) of price movement for a given contract. This equates to how much money you’ll gain or lose in a 1 point move in the futures contract. In a crude oil (/CL) contract, the contract multiplier would be $1,000 representing a $1 move, because 1 contract represents 1,000 barrels of crude oil.
- Another example of this is Micro S&P 500 Index futures contracts, where the contract multiplier is $5 per full index point. So if an investor is long the S&P 500 Index futures contract and the index increases in value from 5,700 to 5,701 points then the individual gains $5. Conversely, if an investor is short the S&P 500 Index futures contract and the index increases from 5,700 to 5,701 then the individual loses $5.
Tick size is the smallest possible price increment that a futures contract can move up or down. These are set by the exchange. While the tick size for a stock or option is typically $0.01, the tick size for futures can vary from one contract to another.
- For example, the tick size for Micro S&P 500 Index futures (/MES) is 0.25. This means that trading will always occur in 0.25 increments. In this example, 4 ticks of movement would equal 1 point.
Tick value is the monetary value associated with a single tick size movement. Tick value = (tick size) x (the contract multiplier).
- For example: The Micro S&P 500 Index (/MES) futures represents $5 x S&P 500 Index. Since the /MES tick size is 0.25, the tick value would be $1.25 (0.25 x $5).
The margin requirement is the cash needed to open a futures position.
Margin requirements are set by the exchange and may fluctuate on a daily basis. Additionally, Robinhood may increase the margin requirement above the exchange minimum from time to time to help further mitigate risk.
When you have a futures position, you also need to maintain enough funds in your account to cover the margin maintenance requirement. For more details, check out Futures deficits and margin calls.
The last day to trade is the final date you can close out of a contract you hold a position in. However, for certain products, you may not be able to open new positions even before the LDTT. For more details, check out Futures contract expiration.
Futures symbols
The futures symbol is a shorthand code, similar to a stock ticker, used to reference a specific futures contract.
At Robinhood (and most other brokers), futures symbols start with a slash / to differentiate them from equities that share the same symbol. The slash is then followed by a root symbol, for example, CL for crude oil, and finally the expiration code. The expiration code specifies the month and year the contract expires. For more details, check out Futures contract expiration.
The complete formula for a futures symbol = [Forward slash (/)] + [Root symbol] + [Expiration month code] + [Expiration year].
For example, a futures contract (/) for Micro Natural Gas (MNG) expiring in January (F) 2025 (25) would have the symbol /MNGF25.
Products with weekly expirations like Bitcoin Friday futures (BFF) may have additional components of their symbol denoting their expiration day.
Settlement and expiration
Similar to options, all futures contracts have an expiration date and will expire. At expiration, futures contracts are either physically settled or cash settled. To avoid delivery of a physically settled futures product, you need to close your position by the last day to trade (LDTT). For more details, check out Futures contract expiration.
Active vs non-active contract tagging
Every futures product has multiple contracts with varying expiration dates. The contract that has the most activity and trading volume is generally called the Active contract. The Active contract typically has tighter spreads and the most liquidity.
Non-active contracts typically have lower trading volumes, and as a result, may have less liquidity and wider spreads. This adds an additional layer of risk that traders should be aware of.
The ability to trade non-active contracts may not always be available depending on how close the contract is to the last day to trade (LDTT). For more details, check out Futures contract expiration.
Commissions and fees
There are a few costs you should be aware of before placing your first futures trade.
The first is a commission that is charged on a per-contract basis for every trade. The commission is charged by Robinhood and is a fixed rate. Robinhood Gold subscribers will notice a lower commission. There’s also a fixed regulatory fee per contract traded.
In addition to the fixed costs for commissions and regulatory fees, there are exchange fees charged by the respective futures exchanges on a per-contract basis for every trade. These will vary depending on the product/symbol and are subject to change. Details on the exchange fees charged by the CME Group can be found here.
Commissions, regulatory fees, and exchange fees will be charged on all trades as well as on any cash settlement transactions.
Fixed costs per contract traded Robinhood Commission:
- Non-Gold Customers: $0.75
- Gold Customers: $0.50
NFA regulatory fee: $0.02
Variable cost per contract traded Exchange fee for trades: $0.20 - $6.50
- Varies by symbol & subject to change
Exchange fee for cash settlements: $0.00 - $2.50
- Varies by symbol & subject to change
Trading hours
All futures products may have varying trading hours. Check out the CME Group's full calendar for details.
Most futures products trade 23 hours a day, 5 days a week, and all times are in Central (Chicago) Time.
The trading day begins at 6 PM ET the day before and ends at 5 PM ET of the current trading day.
- Monday: Trading day begins at 6 PM ET Sunday (the day before) and ends Monday at 5 PM ET
- Tuesday: Mon 6 PM-Tues 5 PM ET
- Wednesday: Tues 6 PM-Wed 5 PM ET
- Thursday: Wed 6 PM-Thurs 5 PM ET
- Friday: Thurs 6 PM-Fri 5 PM ET
Each trading day there is a 1 hour daily maintenance window from 5PM-6PM ET known as the closed period, when trading is closed.
Holiday hours
Holiday hours may vary. For a full list of hours check out the CME Group’s full holiday calendar.
Disclosures
Futures, options on futures and cleared swaps trading involves significant risk and is not appropriate for everyone. Please carefully consider if it's appropriate for you in light of your personal financial circumstances.
Please read the Futures Risk Disclosure Statement prior to trading futures products, and please read the Event Contract Risk Disclosure for more information about the risks associated with forecast event contracts.
RHD accounts are not protected by the Securities Investor Protection Corporation (SIPC) and are not Federal Deposit Insurance Corporation (FDIC) insured. RHD is not a bank. Prior to trading virtual currency Futures products, please review the NFA Investor Advisory & CFTC Advisory providing more information on these potentially significant risks.
Futures, options on futures and cleared swaps trading is offered by Robinhood Derivatives, LLC, a registered futures commission merchant with the Commodity Futures Trading Commission (CFTC) and Member of National Futures Association (NFA).