1. What are Stock Futures? Stock Futures are financial contracts where the underlying asset is an individual stock. Stock Future contract is an agreement to buy or sell a specified quantity of underlying equity share for a future date at a price agreed upon between the buyer and seller. The contracts have standardized specifications like a market lot, expiry day and unit of price quotation, tick size and method of settlement. 2. How are Stock Futures priced? The theoretical price of a futures contract is the sum of the current spot price and the cost of carrying. However, the actual price of futures contract very much depends upon the demand and supply of the underlying stock. Generally, the futures prices are higher than the spot prices of the underlying stocks. Futures Price = Spot Price + Cost of carrying The cost of carrying is the interest cost of a similar position in the cash market and carried to the maturity of the futures contract less any dividend expected ...