Future Indexes

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Index futures are futures contracts on a stock or financial index. For each index, there may be a different multiple for determining the price of the futures contract.
For example, the S&P 500 Index is one of the most widely traded index futures contracts in the United States; stock portfolio managers who want to hedge risk over a certain period of time often use S&P 500 futures.

Why is a Future Contract different to other symbols available for trading?
‘Futures’ are essentially a way of trading on a particular contract, at a specified future price. Future contracts have specified trading times and expiry dates. Clients must close positions on an expiring contract or they will be closed automatically.

 

POPULAR INDEX FUTURES

Within the United States, some of the most popular index futures are the mini Dow Jones (YM) and the mini Nasdaq (NQ) on the Chicago Board of Trade, and the mini Russell 2000 (ER2) and mini S&P 500 (ES) on the Chicago Mercantile Exchange.

Index futures are also available in foreign markets. This includes the DAX and the SMI index futures in Europe, and the Hang Seng Index future in Asia.

 

INDEX FUTURES CONTRACTS

An index futures contract states that the holder agrees to purchase an index at a particular price on a specified date in the future. If on that future date the price of the index is higher than the agreed-upon price in the contract, the holder has made a profit, and the seller suffers a loss. If the opposite is true, the holder suffers a loss, and the seller makes a profit.

Futures contracts are legally binding documents specifying the detailed agreement between the buyer and seller. It differs from an option in that a futures contract is considered an obligation, while an option is considered a right that may or may not be exercised.

Read about how to open a live account and start trading and using all benefits of the platform here.

 


 

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