Ever hear a trader say that move was worth exactly $12.50 and wonder how they knew so fast? It's not genius, it's two numbers printed on a label, and once you can read the label the math is yours forever.
By the end of this one you'll know what contract size and tick size mean, and how to turn any price move into exact dollars with one line of multiplication.
The lesson
Every futures contract has two numbers on its label: the size, meaning how much of the thing one contract covers, and the tick, meaning the smallest step its price is allowed to move. It's the egg case at the feed store. Eggs there don't sell one at a time, they sell by the flat of 30, and that flat is the contract size. The price doesn't crawl by tenths of a penny either, it moves in nickel steps, and that step is the tick. So when the flat price ticks up twice, you know without guessing it moved exactly a dime. Real markets work the same way: classic corn futures cover 5,000 bushels and tick in quarter cents, which makes every tick worth exactly $12.50, and the only math you ever need is ticks moved, times tick value, times number of contracts.
Walk the $100
Same lesson, told by a hundred dollar bill. Tap to walk it one step at a time.
In this example, a mini contract covers 10 units of something priced at $10, so one contract means $100 riding on the price.
The tick is one cent, worth 10 cents per contract, and the price climbs 50 ticks, so the position gains $5.
The exchange takes a nickel fee going in and a nickel coming out, so the real result is $4.
90.
Ticks times tick value minus fees, that's the whole receipt.
At your kitchen table
You got volunteered to run the candy table at the school fundraiser. The supplier only sells cases of 50 bars at $40 a case, no singles, and their price sheet only ever moves in $2.50 steps per case. You figure you need about 120 bars.
Pick your move. Then peek at the other roads if you're curious.
Order three cases today. Three cases, 150 bars, $120 out the door. The next week the sheet ticks up one step, and here's the little magic trick, you know without any guessing that you saved exactly $7.50, one step times $2.50 times three cases. That's the entire math futures traders use, steps moved times step value times how many you hold.
Split the order with another parent. You and another mom go halves, each taking 75 bars for $60. The case size didn't change, you just found a way to hold a smaller piece of it, which is exactly why exchanges invented mini contracts for people who don't want a whole one. Smaller slice, same candy, same math.
Wait and hope for a dip. The sheet ticks up two steps instead, so three cases now cost $15 more, and you can name that number to the penny before you even reorder. Waiting wasn't crazy, prices do dip, it just didn't this time. The surprising gift is that the label math told you the exact cost of being wrong, no mystery anywhere in it.
Contract size and tick size are the two numbers on the label that turn any price move into exact dollars with one line of multiplication.
Quiz yourself
🐓 Got a question about this one? Ask it on the live at 7 AM or 7 PM Mountain, TikTok @247candles. Steven answers class questions by name.