Stock index futures
From MarketsWiki
Stock index futures are tradable contracts on the future movement of a (usually) widely followed and traded stock index. Trading on such contracts has become enormously popular in recent years with individual traders and investors since the introduction of the e-mini contract by the Chicago Mercantile Exchange.
Brief Background
Futures on equity indexes first began trading in the U.S. in 1982 when the Chicago Mercantile Exchange (CME) launched its S&P 500 futures contract. Since then, the CME and the Chicago Board of Trade (CBOT), which offers futures on the Dow Jones Indexes, have remained at the forefront in creating similar products on a range of stock indexes. The two exchanges merged in 2007 to create the CME Group.
The CME began rolling out its suite of electronically-traded, small-contract 'E-mini' stock index futures in 1997. The exchange now boasts a 92% market share of index futures and options trading[1] led by the E-mini NASDAQ-100, the CME's fastest-growing e-mini index contract by trading volume. The E-minis, which trade at one-fifth the size of regular index-futures contracts, have been called one of the two most succesful trading innovations of the past decade.[2]
Trading Index Futures
Stock index futures, especially E-minis, offer traders and investors a range of advantages, including extremely high leverage, no physical or electronic delivery hassles and the chance to trade the whole market in a single contract.[3]
Since introducing stock index futures contracts on other popular indexes like the Dow Jones Industrial Average and the small-cap Russell 2000 Index, exchanges have begun listing more niche-based products. These include the CBOE Volatility Index Futures, which track an stock index's volatility, and the Morningstar Style Index Futures, traded on US Futures Exchange, which track indexes by stock size and investment style.
References
- ↑ CME E-mini Stock Index Futures and Options. CME. Retrieved on May 6, 2008.
- ↑ Stock Index Futures. Lind-Waldock. Retrieved on May 6, 2008.
- ↑ Stock Index Futures Trading Guide. tradersvic.com. Retrieved on May 6, 2008.
