Answers to Common Questions About Futures

March 13, 2024 Beginner
Learn about the basics of futures contract specifications, including notional value and tick size.

Futures contracts allow market participants to capture trading opportunities based on the price movements of commodities, currencies, equity indexes, and interest rates.

The futures market is made up of several participants like banks, corporations, governments, farmers, institutional investors, and retail traders. These participants may be looking to either hedge their risk or capitalize on price fluctuations, which is known as speculating.

Futures contract specifications

A stock offers exposure to the price movement of a specific company, such as pharmaceuticals, auto makers, or tech giants. Futures contracts offer exposure to the price movement of other assets and instruments like euros, crude oil, or soybeans.

A futures contract is an agreement to buy or sell a financial instrument or a physical commodity for a future delivery on a regulated commodity futures exchange. The key components to futures contracts are known as contract specifications, or contract "specs."

Futures contract specifications include:

  • Contract size. This is the quantity of the asset in each contract, which is standardized and does not change but can be different for each instrument. For example, one contract of Crude Oil (/CL) represents 1,000 barrels. The E-Mini S&P 500 futures (/ES) represent 50 times the price of the S&P 500® index (SPX).
  • Contract value, or "notional value." This is the contract size multiplied by the current price. For example, if /CL is trading for $65 per barrel, the notional value of one contract is $65,000 ($65 x 1,000).
  • Tick size. Tick size is the minimum price increment a particular contract can fluctuate. Tick value is often quoted in dollars and cents, or even fractions of a penny.
  • Delivery. Futures contracts are either cash-settled—contracts expire directly into cash at expiration—or physically settled—contracts expire directly into the physical commodity. Physical delivery specifications (where and when the physical commodity is to change ownership) are included in the contract specs. Because most futures participants trade futures in order to gain exposure to price movement, and not the physical delivery, most contracts are liquidated prior to expiration. Many firms, including Schwab, don't allow physical delivery.


When buying or selling a futures contract, a trader doesn't put up the entire notional value. Instead, a trader posts the initial margin.1 The futures margin requirement is essentially a "good faith" deposit. Futures contracts use leverage, which means a smaller initial investment gives you exposure to a larger amount of notional value. When using leverage, a small market movement can have a large impact—positive or negative—on the account's profit or loss (P/L).

Because each futures product comes with its own set of risk dynamics, and those dynamics can change with market conditions, each has its own margin requirement. Margin requirements are set by the exchange but can change at any time. Initial margin and other contracts specs can be viewed on the thinkorswim® trading platform. Just head over to the Trade tab, and select Futures in the drop-down box.

Image shows how qualified account owners can log in to the thinkorswim platform to see initial margin requirements and other contract specs.

Source: thinkorswim platform

For illustrative purposes only. Past performance does not guarantee future results.

Futures contract specs examples

While each futures contract of a specific product comes in a standardized contract size, each product is different. Sometimes, the reason for a specific size was based on a fundamental factor. For example, the contract size of RBOB Gasoline futures (/RB) is 42,000 gallons, which makes sense because a barrel of crude oil is typically refined into 42 gallons of gas. Because the contract size of crude oil is 1,000 barrels, the two contracts match up nicely.

Corn, soybeans, and wheat

Each futures contract for corn, soybeans, and wheat specifies 5,000 bushels. The minimum tick size for these three grain futures is one-quarter of a cent.

Crude oil

One West Texas Intermediate (WTI) Crude Oil futures (/CL) contract specifies 1,000 barrels of oil, and the minimum price fluctuation is one cent. WTI is a light, "sweet" grade of oil (lower density and sulfur content than many other grades) like much of the crude pumped in major U.S. oil regions.

30-year Treasury bonds, 10-year Treasury notes, and eurodollars

Part of the CME Group's interest rate complex, eurodollars, T-bond, and T-note futures are among the most actively traded financial futures in the world and are used by banks and others to manage interest rate risks, such as Federal Reserve policy, economic conditions, and more.

Contract sizes for eurodollars and T-notes are $1 million and $100,000, respectively. Eurodollars are quoted in dollars and cents and have a minimum price fluctuation of one quarter of one interest rate basis point ($6.25 per contract). T-bond futures are quoted in 32nds of a point, and the minimum price move is one-half of one thirty-second of one point ($15.625, rounded to the nearest cent per contract).


One gold futures contract specifies 100 troy ounces of the metal, quotes in U.S. dollars and cents per ounce, and has a minimum fluctuation of 10 cents per ounce.

Live cattle and lean hogs

Both specify 40,000 pounds per contract and a minimum price fluctuation of $0.00025 per pound. Cattle is known for its live delivery, while lean hogs are financially settled based on carcass weight.

1Trading on margin increases your level of market risk. Your downside financial risk is not limited to the amount of equity in your account. Charles Schwab Futures and Forex LLC., (CSFF) may liquidate any or all of your positions at any time if your account equity drops below required margin levels. CSFF may increase its “house” maintenance margin requirements at any time and is not required to provide you with advance notice. You are not entitled to an extension of time on any type of margin call.

Futures and futures options trading involves substantial risk and is not suitable for all investors. Please read the Risk Disclosure Statement for Futures and Options prior to trading futures products.

Futures accounts are not protected by the Securities Investor Protection Corporation (SIPC). Additional CFTC and NFA futures and forex public disclosures for Charles Schwab Futures and Forex LLC can be found here.

Futures and futures options trading services provided by Charles Schwab Futures and Forex LLC. Trading privileges subject to review and approval. Not all clients will qualify.

Charles Schwab Futures and Forex LLC is a CFTC-registered Futures Commission Merchant and NFA Forex Dealer Member.

Charles Schwab Futures and Forex LLC (NFA Member) and Charles Schwab & Co., Inc. (Member FINRA/SIPC) are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

The S&P 500® is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by Charles Schwab & Co., Inc. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Charles Schwab & Co., Inc is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500.