Futures Contract Specifications Explained: What Every Trader Must Know
If you don’t understand the futures contract specifications for the market you’re trading, you don’t understand the risk. Contract specs define tick size, tick value, multiplier, expiration, and how the contract actually behaves—these matter more than your setup. This connects directly to ticks and dollar value and margin requirements.
What Contract Specs Are
Contract specs are the rulebook for each futures market. They tell you exactly how price moves, how much each move is worth, and when the contract expires. Every market has different specs—ES isn’t CL, and CL sure isn’t NG.
Core Contract Specification Components
| Spec | What It Means | Why It Matters |
|---|---|---|
| Tick Size | Smallest price movement | Defines how fast P&L changes |
| Tick Value | Dollars per tick | Your real leverage per trade |
| Multiplier | Value applied to index/price | Defines contract’s total size |
| Expiration | Last day contract trades | Affects rollover timing |
| Trading Hours | When the market is open | Controls volatility windows |
| Settlement Type | Cash vs physical | Dictates delivery risk |
Example Contract Specs (ES vs CL)
| Item | ES (S&P 500) | CL (Crude Oil) |
|---|---|---|
| Tick size | 0.25 | 0.01 |
| Tick value | $12.50 | $10.00 |
| Multiplier | 50 × index | 1,000 barrels |
| Expiration | Quarterly | Monthly |
| Settlement | Cash | Physical delivery |
Why Contract Specs Matter for Risk
If you don’t know the tick value and multiplier, you don’t know your position size. CL can move $1,000 in seconds. ES can rip $250 in one bar. Specs tell you whether a contract is a scalper’s playground or a widowmaker.
Specs Also Define Margin Requirements
Larger multipliers mean larger margin. Volatile tick structures mean higher margin during events. This ties directly into how mark-to-market hits your balance each day.
Where to Find Contract Specifications
Every contract's specs are published by the exchange (CME, NYMEX, COMEX, CBOT). Your broker platform usually lists them too—but the exchange is the real source.
The Bottom Line
Futures contract specifications define everything that matters: tick size, tick value, expiration, margin, and risk. If you understand contract specs, you understand the “DNA” of the market you’re trading. If you ignore them, you’re trading blind.