Contract Size

AAA

DEFINITION of 'Contract Size'

The deliverable quantity of commodities or financial instruments underlying futures and option contracts that are traded on an exchange. The contract size is standardized for such futures and options contracts, and varies depending on the commodity or instrument that is traded. The contract size also determines the dollar value of a unit move in the underlying commodity or instrument.

INVESTOPEDIA EXPLAINS 'Contract Size'

The contract size of most equity option contracts is 100 shares. However, the contract size for commodities and financial instruments such as currencies and interest rate futures varies widely. For example, the contract size for a Canadian dollar futures contract is C$100,000, while the size of a soybean contract traded on the Chicago Board of Trade is 5,000 bushels.

The size of a gold futures contract on the COMEX is 100 ounces. Therefore, each $1 move in the price of gold translates into a $100 change in the value of the gold futures contract.

RELATED TERMS
  1. Forward Contract

    A customized contract between two parties to buy or sell an asset ...
  2. Underlying

    1. In derivatives, the security that must be delivered when a ...
  3. Option

    A financial derivative that represents a contract sold by one ...
  4. Put

    An option contract giving the owner the right, but not the obligation, ...
  5. Strike Price

    The price at which a specific derivative contract can be exercised. ...
  6. Average Daily Trading Volume - ...

    The average amount of individual securities traded in a day or ...
Related Articles
  1. Getting Started In Foreign Exchange ...
    Forex Education

    Getting Started In Foreign Exchange ...

  2. Interpreting Volume For The Futures ...
    Options & Futures

    Interpreting Volume For The Futures ...

  3. Vertical Bull and Bear Credit Spreads
    Options & Futures

    Vertical Bull and Bear Credit Spreads

  4. How Does Your Margin Grow?
    Options & Futures

    How Does Your Margin Grow?

Hot Definitions
  1. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  2. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  3. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  4. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  5. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
  6. Earnings Multiplier

    An adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used ...
Trading Center