A stock index simply represents a basket of underlying stocks. Indices can be either price-weighted or capitalization-weighted. In a price-weighted index, such as the Dow Jones Industrials Average, the individual stock prices are simply added up and then divided by a divisor, meaning that stocks with higher prices have a higher weighting in the index value. In a capitalization-weighted index, such as the Standard and Poor’s 500 index, the weighting of each stock corresponds to the size of the company as determined by its capitalization (i.e., the total dollar value of its stock). Stock indices cover a variety of different sectors. For example, the S&P 500 index includes 500 of the largest blue-chip U.S. companies.
Focusing on 500 large-cap common U.S. stocks, the S&P 500 is a narrower market indicator than the Russell 2000. The second most followed index for large-cap stocks after the DJIA, the S&P 500 is given attention for its ability to predict and influence future market trends. Notable stocks include Amazon.com Inc., Caterpillar Inc., Exxon Corp., JPMorgan Chase & Co., Microsoft Corp., Starbucks Corp., and Verizon Communications. The S&P 500 is the most popular product at the CME Group.
The E-mini S&P 500 futures contract provide a way to efficiently gain exposure to the key benchmark for large-cap U.S. stocks and arguably the most liquid stock index futures contract in the world.
The E-mini S&P 500 futures contract provide a contract that is 1/5th the size of the standard contract. The most common contract symbol is ES.
The futures contract trades solely on the CME Globex platform providing access virtually around the clock with complete price transparency, liquidity and tight bid/ask spreads. The electronic contract trades from 5:00 PM CT to 4:00 PM CT, with a trading halt from 3:15 PM CT to 3:30 PM CT, Monday through Friday.
One E-mini futures contract is $50 x the E-mini S&P 500 futures price. The previous settlement price (October 24, 2012) for December 2012 E-mini S&P futures was 1405.25 or $70,262.50 per contract.
The futures contract price quotation is $12.50 per .25 index points. The previous settlement price (October 24, 2012) reads as 1405.25 or fourteen zero five and a quarter. The next price movement after 1405.25 downward is 1405.00, followed by 1404.75. Therefore, a price move, from 1405.25 to 1404.25, is $50.
The performance bond or initial margin requirement to initiate one futures contract position is $5,060 (as of November 11, 2015). To control that futures position going forward the maintenance margin becomes $4,600 (as of November 11, 2015).
The Daily Price limits are designed to coordinate with circuit breakers provisions as applied by the New York Stock Exchange (NYSE). 7%, 13%, and 20% price limits are applied to the futures fixing price and are effective from 8:30 AM CT to 3:00 PM CT, Mondays through Fridays. 5% up-and-down limits are effective 5:00 PM CT to 8:30 AM CT, Sundays through Fridays; and 3:00 PM CT to 4:00 PM CT, Mondays through Fridays. Between 3:00 PM CT to 4:00 PM CT, the 5% price limit will not be allowed to breech the 20% daily limit.
The E-mini futures contract month listings are March (H), June (M), September (U), and December (Z).
The E-mini futures contract’s Last Trading Day (LTD) is the 3rd Friday of the contract month, allowed to 8:30 AM CT. The December 2012 E-mini S&P futures contract LTD is December 21, 2012 for example. The daily settlement, following the CME Group daily settlement procedures, of the E-mini S&P futures is equal to the daily settlement price of the S&P 500 futures, rounded to the nearest tradable tick.
Be aware of major financial reports if trading the stock index futures as they will potentially affect prices. For example, typically the first Friday of every month the unemployment numbers are released at 7:30 AM CT.
Visit https://www.danielstrading.com/ for additional contract specifications and market information regarding the E-mini S&P futures market.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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