Difference between Cash and Future Market

Prasanth Menon Prasanth Menon 7th September 2023 - 05:01 pm

BASIS FOR COMPARISON	CASH MARKET	FUTURE MARKET
Meaning	A place where financial instruments are traded, wherein the delivery of stock takes place.	Future market is a place where only future contracts are bought and sold at an agreed date in the future and at a predefined price.
Ownership	When you buy shares and take delivery, you become shareholder of the company till you hold the shares.	You can never be a shareholder when you trade in Futures.
Delivery	It is done on T+2 days.	No delivery takes place as the Future contract expires on expiration date.
Payment	Full amount needs to be paid at the time of buying shares in cash.	Only margin money requires to be paid for initiating Future contract.
Lot size	One can buy even single share of company.	One has to buy a minimum lot size which is already defined. Such as in case of NIFTY lot size is 75.
Holding period	In cash market you can buy shares and hold for life.	In futures, you have to settle the contract on the expiration date i.e. maximum of three month.
Dividends	When you are shareholder of the company, you are entitled to receive dividend.	In future contract you are not entitle for any dividend.
Objectives	People buy shares in cash market for investment purpose	Futures can be traded for Arbitrage, hedging or speculation purpose.