Chapter 2 of 16
Silver quotation units and contract sizing
Convert per-kilogram quotes into lot exposure, point value and a realistic comparison between contract variants.
In this chapter
- Quantity is not a decorative field
- Tick, point and total value
- Verify before using any product table
- A size ladder is also a liquidity ladder
- Normalise location, quality and currency before computing a basis
- Decision lab: One quoted point can have different rupee effects
- Worked example
- Common mistakes
- Check your understanding
Quantity is not a decorative field #
A contract’s lot size tells you how much economic exposure one lot represents. A quoted price tells you the value per stated base unit. Multiplying only the numbers without checking the physical dimensions can produce a large error.
If a fictional contract represents 30 kilograms and the price is per kilogram, the price multiplier is 30. If a different variant represents 5 kilograms, the same price movement produces one-sixth of the gross rupee P&L for one lot.
Tick, point and total value #
A tick is the permitted price increment, while a point is the chosen one-unit quote change. Tick value equals tick size times the quote multiplier. Total notional equals quoted price times multiplier times lots. These are separate from the collateral required.
A smaller contract can allow finer exposure increments, but it may have different liquidity, spreads, permitted series and delivery conditions. Never assume one variant has the same operational terms scaled down proportionately.
Verify before using any product table #
The official MCX silver page links current specifications and variant information. Use the named series and applicable specification; it is safer to teach a generic conversion than to freeze a changing contract list into a permanent promise.
For educational calculations, enter the verified quote multiplier in the futures P&L worksheet. Then separately examine the funding and delivery obligations for that contract.
A size ladder is also a liquidity ladder #
Two hypothetical contract sizes may represent equal aggregate metal but different bid/ask depth, available maturities and execution costs. Matching six small lots to one large lot matches quantity, not necessarily the actual cost of entering and exiting the book.
Record quote unit, mass per contract, tick value, active-series depth, settlement convention and cash requirement. Simulate an executable package for the intended quantity. A thin smaller contract can have a worse all-in outcome despite appearing friendlier to a small account.
Normalise location, quality and currency before computing a basis #
A dollar-per-ounce future, a rupee-per-kilogram contract and a local delivered invoice belong to different contracts and commercial terms. Convert units and fineness, align value dates and FX, then account for handling, taxes and credit terms.
Build a gross spread and a net executable spread separately. If a component is indicative or stale, mark it as such. Residual mispricing should survive the complete bridge and access constraints before it becomes a research candidate.
Decision lab: One quoted point can have different rupee effects #
A fictional silver contract quoted per kilogram with a 30-kilogram multiplier changes value by ₹3,000 for a ₹100-per-kilogram move. Another size needs its own calculation. The example does not identify any current exchange contract specification.
Write quote unit, physical units per lot, tick size and cash value per tick in one table. Recalculate a price stop as account exposure and apply whole-lot constraints. A visually small move on the chart can exceed the intended budget when the multiplier is large.
Hypothetical worked example
Compare two fictional lot sizes
At a hypothetical ₹70,000 per kilogram, a 30-kilogram contract represents ₹21,00,000. A ₹500-per-kilogram move creates ₹15,000 gross P&L per lot.
A hypothetical 5-kilogram variant at the same quote represents ₹3,50,000 and changes by ₹2,500 for that move. Six of the smaller lots match the physical quantity of one larger lot, but transaction costs and liquidity need not match.
These sizes are worked assumptions, not a current list of eligible contracts or margin quotes. Read the relevant specification before transferring the calculation to a real instrument.
Common mistakes
- Treating one lot as the same amount across all variants.
- Ignoring the quote unit when computing a tick’s rupee value.
A ₹500 move per kilogram on 30 kilograms produces which gross change?
Make this chapter useful
Can you defend the reasoning?
Before moving on, answer the self-check in your own words and write why each alternative fails. Use the worked example to test that explanation. Then apply it in the module research task; keep the assumptions and the evidence that could change your answer.
Sources and further reading
- MCX: silver products and contract specifications ↗
- MCX Clearing: delivery FAQs ↗
- Silver Institute / Metals Focus: World Silver Survey 2026 ↗
- Silver Institute: April 2026 survey release and physical-market interpretation ↗
- IEA PVPS: material-flow scenarios for silicon photovoltaic systems ↗
- LBMA: London vault data and reporting scope ↗
- CME Group: gold delivery, warrants and inventory reporting ↗
- LBMA OTC Guide: lending, borrowing and forwards ↗
- CME Group: exchange for related positions ↗
- MCXCCL: physical delivery FAQs ↗
- World Gold Council: gold market size and structure ↗
- CME Group: position size, stop distance and risk ↗
- MCXCCL: risk, devolvement and delivery-margin FAQs ↗
- NISM: equity derivatives learning objectives and strategies ↗
- CFTC: disaggregated positioning classifications and limitations ↗
- NDTV Profit / BloombergQuint: Jhunjhunwala’s 2021 investor-versus-trader interview (historical context) ↗
- CME Group: technical analysis of commodity prices ↗
- CME Group: defining a trading plan ↗
- CME: delivery notices, NYMEX/COMEX issues and stops ↗
- Silver Institute / Metals Focus: 16 April 2025 survey release, 2024 estimates ↗
- IEA: Energy and AI, 2025 executive summary and scenarios ↗
- Google: Trends normalization, sampling and interpretation ↗
- CFTC: report release schedule ↗
- Bailey et al.: The Probability of Backtest Overfitting ↗
- Federal Reserve: FOMC responsibilities, membership and meetings ↗
Further-reading references from the curriculum source list. Contract sizes, expiry calendars, settlement references, margin parameters and tax treatment can change; verify the current operative documents for the actual product. Worked figures are illustrative, not current quotes.
Progress is stored only on this browser.
Back to Silver: physical flows and relative value · Learning library · Calculators
General financial education. No securities recommendation, assured outcome or personal advice. Read the risk disclosures.
