Index Futures
 |
Definition of 'Index Futures'A futures contract on a stock or financial index. For each index there may be a different multiple for determining the price of the futures contract. |
 |
Investopedia explains 'Index Futures'For example, the S&P 500 Index is one of the most widely traded index 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. However, by using this hedging strategy, if perfectly done, the manager's portfolio will not participate in any gains on the index; instead, the portfolio will lock in gains equivalent to the risk-free rate of interest.Alternatively, stock portfolio managers can use index futures to increase their exposure to movements in a particular index, essentially leveraging their portfolios. |
Related Definitions
Articles Of Interest
-
Modernize Your Portfolio With ETF Futures
Gain access to premier, highly liquid ETFs with lower capital requirements. -
Interpreting Volume For The Futures Market
Learn how to read the volume reports, look at the relation to liquidity and interpret volume using open interest. -
S&P 500 Options On Futures: Profiting From Time-Value Decay
Writing bull put credit spreads are not only limited in risk, but can profit from a wider range of market directions. -
A Beginner's Guide To Hedging
Learn how investors use strategies to reduce the impact of negative events on investments. -
What do the S&P, Dow and Nasdaq futures contracts represent?
Every morning before North American stock exchanges begin trading, TV programs and websites providing financial information will give the quotes for the S&P, Dow and Nasdaq futures contract. ... -
Futures Fundamentals
For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them. -
6 Asset Allocation Strategies That Work
Your portfolio's asset mix is a key factor in whether it's profitable. Find out how to get this delicate balance right. -
Nobel Winners Are Economic Prizes
Before you try to profit from their theories, you should learn about the creators themselves. -
Investing During Uncertainty
The inability to forecast future events can turn the markets upside down. Find out how to stay right-side up. -
An Overview Of Commodities Trading
Commodities markets, both historically and in modern times, have had tremendous economic impact on nations and people. Investing in commodities can quickly degenerate into gambling or speculation ...
Free Annual Reports