A standardized futures contract has a specific:
1. Underlying Instrument: The commodity, currency, financial instrument, or index upon which the contract is based;
2. Size: The amount of the underlying item covered by the contract;
3. Delivery Cycle: The specified months for which contracts can be traded;
4. Expiration Date: The date by which a particular futures trading month ceases to exist and, therefore, all obligations under it terminate;
5. Grade or Quality Specification and Delivery Location: A detailed description of the” par” commodity, security, or other items that are being traded and, as permitted by the contract, a specification of items of higher or lower quality or of alternate delivery locations available at a premium or discount; and
6. Settlement Mechanism: The terms of the physical delivery of the underlying item of a terminal cash payment.
The only nonstandard item of a futures contract is the price of an underlying unity, which is determined in the trading arena.