What Are Equity Index Futures Contracts?
An equity index is a tradable group of stocks where the price of the index is determined by the combined price of all the components. Each unique equity index future represents a particular segment of the stock market: growth, value, large companies, and small companies.
Also referred to as stock index futures, traders buy and sell equity index futures whenever opportunities arise. This way, traders benefit from the combined price diversification of an index futures over trying to pick winning stocks.
Trade Stock Market Action With Equity Index Futures
E-mini S&P 500 Index Futures
The E-mini S&P 500 index futures contract is a derivative of the S&P 500 index which is made up of the 500 largest market-capitalized companies listed on US stock exchanges.
E-mini Nasdaq 100 Index Futures
The E-mini Nasdaq 100 is a stock market index futures that represents 100 of the largest non-financial companies listed on the Nasdaq stock exchange, which is heavily weighted toward the technology sector.
E-mini Dow 30 Index Futures
Based on the Dow 30 stock index, also known as the Dow Jones Industrial Average, E-mini Dow index futures track the price of 30 of the largest companies in the US, representing a wide range of business sectors.
E-mini Russell 2000 Index Futures
Based on a subset of the Russell 3000 index, which tracks the 3,000 largest US traded stocks, E-mini Russell 2000 index futures are a popular measure of small stock performance and US economic growth.
Trade Micro E-mini Index Futures For Increased Flexibility and Reduced Costs
At 1/10th the size of the standard contract, Micro E-mini futures contracts allow traders like you to more easily access the highly liquid equity index futures markets with reduced costs and margins as low as $50. Other advantages of trading these bite-sized contracts include:
- Access to the most popular and liquid futures contracts
- Highly leveraged investment for more buying power*
- Start with a smaller account vs. the full-size E-mini contract
- Increased flexibility for better position management
*Leverage also increases the risk associated with futures trading and only risk capital should be used for trading
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Global Futures Markets at Your Fingertips
Futures trading encompasses a wide range of globally traded products that allow traders at all levels to speculate on the price of these dynamic markets. There are many diverse futures markets to explore, including:
- Energy like crude oil and natural gas
- Metals like gold and copper
- Cryptocurrencies like Bitcoin and ethereum
- Agriculture like coffee and cotton
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Frequently Asked Questions About Index Futures Contracts
There are many advantages to trading index futures contracts, one of which is the flexibility it offers over trading these same instruments using ETFs or individual stock names with their many limitations. Index futures offers extended trading hours, the ability to go short easily, and lower capital requirements.