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What Are E-mini S&P 500 Futures?

December 15, 2020 by Daniels Trading| Futures 101

On March 4, 1957, the Standard and Poor’s 500 (S&P 500) equities index was unveiled on Wall Street. With an initial market capitalization of $172 billion, the S&P 500 closely monitored the largest companies from the industrial (425), railroad (15), and utility (60) sectors. Over time, the index became a go-to benchmark for U.S. equities market performance.

Throughout the majority of the 20th century, the S&P 500 drew the interest of the financial world. Eventually, it became the basis for many derivative products. To address public demand, the Chicago Mercantile Exchange (CME) launched S&P 500 futures for trade in 1982. The contract was the precursor for CME E-mini S&P 500 futures, which were initially listed in 1997.

Today, E-mini S&P futures are among the most frequently traded contracts in the world. Read on to learn more about this exciting product.

Want to learn more about E-mini trading basics? Read our guide, Introduction to  E-Mini Stock Index Futures >>

What Are E-mini S&P Futures?

When it comes to trading U.S. stock market derivatives, the E-mini S&P 500 is the industry standard. Featuring consistent market depth and volatility, E-mini S&P futures are a premier way of engaging the American equities markets.

The CME’s lineup of E-mini products provides traders with a way to customize their exposure to U.S. stocks. To accomplish this feat, E-minis feature reduced size and are tradable exclusively in the electronic format. Offerings such as the E-mini S&P 500, E-mini DOW, E-mini NASDAQ, or E-mini Russell 2000 are all available on the CME Globex platform.

Here are the contract specifications for the E-mini S&P 500:

  • Symbol: ES
  • Contract Unit: $50 x S&P 500 Index (U.S. Dollars and Cents)
  • Tick Size: 0.25 Index Points
  • Tick Value: $12.50
  • Settlement: Financial
  • Contract Months: March, June, September, December
  • Expiration: 9:30 a.m. EST, Third Friday of Contract Month

E-mini S&P futures are open for trade on the CME Globex 23 hours a day, five days a week. Session times run Sunday to Friday, 6:00 p.m. to 5:00 p.m. EST. Each session features a 15-minute trading halt from 4:15 p.m. to 4:30 p.m. EST.

One of the premier calling cards of futures is volatility. Because contracts are leveraged financial instruments, swings in pricing can be magnified. This is certainly true for the E-mini S&P 500. If U.S. large-cap stocks spike or crash, the action is often even more extreme.

To manage periods of extraordinary volatility, the CME has put multiple circuit breakers in place. A circuit breaker ceases trade when the market hits a predetermined price limit. For E-mini S&P futures, circuit breakers are placed accordingly:

  • Market hours: Trade is temporarily halted when the downside price limits of 7 percent and 13 percent are hit; trade is suspended for the session when the daily 20 percent price limit is hit.
  • Overnight (5:30 p.m. to 8:30 a.m. EST): Trade is temporarily halted if price moves up or down 7 percent. Prices are not to be allowed to exceed the 20 percent daily limit.

Price limits are fixed according to the previous day’s volume-weighted price average (VWAP) calculated during the final 30 seconds of trade (2:59:30 p.m. to 3:00:00 p.m. CST).

Trade U.S. Large Caps with CME E-mini S&P 500 Futures

For more than two decades, traders from around the globe have engaged U.S. large-cap stocks via CME E-mini S&P futures. Through boom or bust, this contract has provided successful traders and investors with countless opportunities. Are you ready to join their ranks?

If so, a great place to begin is with Daniels Trading’s free guide, Introduction to E-mini Stock Index Futures. In it, you’ll learn how to capitalize on the functionality and benefits of equities index futures. Don’t wait―download your free copy today!

Want to learn more about E-mini trading basics? Read our guide, Introduction to  E-Mini Stock Index Futures>>

Filed Under: Futures 101

About Daniels Trading

Daniels Trading is division of StoneX Financial Inc. located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading was built on a culture of trust committed to a mission of Independence, Objectivity and Reliability.

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