S&P 500 Futures

Market

As part of the financial futures complex of products within commodities futures, the S&P 500 futures index is one of the most widely traded index commodities futures contracts in the U.S. stock portfolio managers who want to hedge risk over a certain period of time often use S&P 500 Futures to do so. By shorting these contracts, stock portfolio managers can protect themselves from the downside price risk of the broader market.

History

The Chicago Mercantile Exchange (CME) introduced trading in S&P 500 futures in 1982. The contracts are based on the Standard and Poor's 500 Index (S&P 500), which contains many of the largest companies in the world. Therefore, movement in the direction of the S&P futures is one of the best indicators of overall short-term market direction. The S&P e-mini futures contract was introduced by the CME 1997, after the value of the existing S&P contract (then valued at 500 times the index, or over $500,000) became too large for many small traders.

Facts

S&P 500 futures contracts give buyers the right to a basket of the stocks in the S&P 500 on expiration date. Now priced at 250 times the index, they're used mostly by institutional investors with the exception of e-mini futures contracts, which have a lower value and are used by retail investors.

Trading

The main reason that S&P futures are so popular for detecting strength is because the contract trades 24 hours a day on financial exchanges around the world. It allows traders and brokers to gauge the futures levels within commodities futures markets before the actual stock markets open.

  • S&P 500 Futures are traded in the CME’s open outcry format and electronically on the CME’s Globex platform.
  • S&P 500 Index Futures contracts expire each quarter, always on the third Friday of March, June, September and December.
  • The CME offers two sizes of the S&P 500 contract: the standard "big" futures contract and the S&P 500 "e-mini" contract:
  • The standard contract is what the institutions and commercials trade, electronically and in the open-outcry format.
  • At one-fifth the size, the S&P e-mini futures contract is more affordable to retail traders, with lower day-trading margin requirements, and traded electronically.
  • Delivery months for S&P 500 futures occur in all months.

 

Contract Specifications  

Contract SymbolContract UnitPrice Quotation
ES$50 per contractdollars per contract
Trading ExchangeTrading HoursTick Value
CME GLOBEX17:00 - 16:150.5 index points = $50

Contract specifications are for the E-mini S&P.

 

Fundamental Reports

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This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.