The U.S. equities market is the largest in the world, boasting more than $25 trillion in value. Led by the New York Stock Exchange (NYSE) and the NASDAQ, U.S. markets are the global benchmark for liquidity and stability.
Although U.S. equities are an attractive alternative for high-net-worth and long-term investors, they present several challenges to individuals with limited capital and time horizons. Traditional methods of buying corporate stocks or mutual funds can inhibit short-term retail traders in several ways:
- Capital intensive: Typically, substantial account minimums are required to buy and sell stocks and mutual funds.
- Liquidity concerns: Corporate bankruptcies or restructuring can impact the trader’s ability to exit an open position.
- Shorting restrictions: The U.S. Securities and Exchange Commission (SEC) has various restrictions in place on short selling activities.
- Availability of leverage: In comparison to futures, the availability of leverage is limited.
- Transaction fees: Outright purchase of stocks or mutual funds can accrue substantial asset-specific fees and commissions.
E-mini futures trading offers the benefits of U.S. equities while eliminating many of the drawbacks involved in traditional investment practices. All of the top indices are offered, including the S&P 500, NASDAQ 100 and Dow Jones Industrial Average (DJIA).
If a trader is inclined to engage the U.S. equities markets without ever purchasing a share of stock, then any of the E-mini products provides a variety of trading possibilities and opportunities.
E-mini S&P 500
The Standard & Poor’s 500 (S&P 500) was introduced in 1957 as an index to measure the value of the 500 largest companies listed on the NYSE. Today it’s viewed as a leading indicator of U.S. economic health and includes companies from both the NYSE and NASDAQ.
The E-mini S&P 500 futures contract enables traders to manage risk or speculate upon future movements of U.S. large cap stocks. Here are the contract specs put forth by the CME Group:
| E-mini S&P 500 Futures | |
|---|---|
| Tick size | .25 index points |
| Single tick value | $12.50 |
| Product symbol | ES |
| Contract months | Quarterly (March, June, September, December) |
| Settlement | Financially settled |
Trading volumes facing the E-mini S&P 500 are substantial, averaging more than 1 million contracts per session. Such volumes are a testament to its popularity and utility.
E-mini Dow Jones Industrial Average
When it comes to stock market indices, the DJIA is easily the most recognizable name in the world. Since its creation in 1896, the DJIA has been the go-to measurement for U.S. economic prowess. It consists of 30 elite public companies listed on the NYSE or NASDAQ, ranging from commercial lenders to sports apparel manufacturers.
The E-mini Dow futures contract gives short-term traders the ability to engage the DJIA without having to tie up extensive risk capital via the purchase of large-cap stocks.
The contract specs for the E-mini Dow as put forth by the CME Group:
| E-mini Dow Futures | |
|---|---|
| Tick size | 1.00 index point |
| Single tick value | $5.00 |
| Product symbol | YM |
| Contract months | Quarterly (March, June, September, December) |
| Settlement | Financially settled |
Seemingly everyone has an opinion on the DJIA and where it is going. The E-mini Dow makes trading these ideas and opinions possible.
E-mini NASDAQ 100
Since its introduction in 1971, the NASDAQ has grown into the world’s second largest equities venue behind the DJIA. The calling card of the NASDAQ has always been technology, with more than 3,000 companies currently listed on the exchange.
The NASDAQ 100 index is a proportionally weighted basket of the 100 largest NASDAQ companies. It’s commonly viewed as a barometer of the technology sector and related industries’ health.
E-mini NASDAQ 100 futures are extremely useful for trading volatilities facing the tech sector. Listed below are the CME Group’s E-mini NASDAQ 100 contract specs:
| E-mini NASDAQ 100 Futures | |
|---|---|
| Tick size | .25 index points |
| Single tick value | $5.00 |
| Product symbol | NQ |
| Contract months | Quarterly (March, June, September, December) |
| Settlement | Financially settled |
Many retail traders consider affordability as an attractive attribute of the E-mini NASDAQ. The $5 tick value is commonly viewed as an asset by traders looking to be active in the market without taking on too much risk.
Getting Started
E-mini products are great tools for individuals interested in trading their views regarding the world’s largest and most public equities markets. To find out more check out dT’s comprehensive online guide to E-mini futures trading.
