Beginner's Guide To E-Mini Futures Contracts: What Are The E-Minis?
AAA
  1. Beginner's Guide To E-Mini Futures Contracts: Introduction
  2. Beginner's Guide To E-Mini Futures Contracts: What Are The E-Minis?
  3. Beginner's Guide To E-Mini Futures Contracts: E-Mini Characteristics
  4. Beginner's Guide To E-Mini Futures Contracts: E-Mini Specifications
  5. Beginner's Guide To E-Mini Futures Contracts: Who Trades The E-Minis?
  6. Beginner's Guide To E-Mini Futures Contracts: Trading The E-Minis
  7. Beginner's Guide To E-Mini Futures Contracts: Other E-Mini Contracts

Beginner's Guide To E-Mini Futures Contracts: What Are The E-Minis?

An "e-mini" is an electronically traded futures contract that represents a portion of a standard futures contract. As futures contracts, the e-minis represent an agreement to buy or sell the cash value of the underlying index at a specified future date. The contracts are sized at a certain value multiplied by the futures price; this value depends on the particular e-mini. The e-mini S&P 500, for example, has a contract size of $50 times the e-mini S&P 500 futures price. If the value of the e-mini S&P 500 is $1,320, the value of the contract is $66,000 ($50 x $1320). The value of the contract changes as the price of the futures moves.

Mini contracts are available on a range of products, including indexes, metals, forex and commodities. Generally, however, investors and traders are referring to the e-mini stock index futures - and in particular, the e-mini S&P 500 - when discussing "e-minis."

A stock index is a statistic that reflects the composite value of a selected group of stocks. The S&P 500, for example, is an index comprised of 500 stocks chosen for market size, liquidity and industry grouping. The Dow Jones Industrial Average, on the other hand, is an index made up of 30 of the largest and most influential companies in the United States. Stock index futures allow traders to buy and sell the strength of an entire cash index without having to own every individual stock, making them a practical trading instrument. Each stock index future trades on a multiple of the underlying cash index, and because they are not based on a tangible commodity, they are settled in cash.

SEE: The ABCs Of Stock Indexes

The Chicago Mercantile Exchange (CME) introduced the first e-mini product on Sept. 9, 1997 when it launched the e-mini S&P 500. This smaller cousin of the S&P 500 enabled more participation in the stock index futures markets because it traded at one-fifth the size of the full-sized contract, making it much more affordable to individual investors and traders.

The daily settlement prices for the e-mini contracts are the same as the regular-sized contract (based on contract month). As a result, a position with five e-mini S&P 500 futures contracts (that each trade at one-fifth the size of the full-sized contract) has the same financial value as one full-sized contract in the same contract month (assuming both positions are on the same side of the market).

The most popular e-mini stock index futures contracts include the:

  • E-mini S&P 500 (ES)
  • E-mini NASDAQ-100 (NQ)
  • E-mini Dow (YM)
  • E-mini S&P MidCap 400 (EMD)
  • E-mini Russell 2000 (TF)
The ES, NQ, YM and EMD are electronically traded on the CME Globex platform, while the TF trades on the Intercontinental Exchange (ICE) electronic trading platform. Beginner's Guide To E-Mini Futures Contracts: E-Mini Characteristics

  1. Beginner's Guide To E-Mini Futures Contracts: Introduction
  2. Beginner's Guide To E-Mini Futures Contracts: What Are The E-Minis?
  3. Beginner's Guide To E-Mini Futures Contracts: E-Mini Characteristics
  4. Beginner's Guide To E-Mini Futures Contracts: E-Mini Specifications
  5. Beginner's Guide To E-Mini Futures Contracts: Who Trades The E-Minis?
  6. Beginner's Guide To E-Mini Futures Contracts: Trading The E-Minis
  7. Beginner's Guide To E-Mini Futures Contracts: Other E-Mini Contracts
RELATED TERMS
  1. Inverse Transaction

    A transaction that can cancel out a forward contract that has ...
  2. Best To Deliver

    The security that is delivered by the short position holder in ...
  3. Exchange Traded Derivative

    A financial instrument whose value is based on the value of another ...
  4. Cash-And-Carry Trade

    A trading strategy in which an investor buys a long position ...
  5. ISDA Master Agreement

    A standard agreement used in over-the-counter derivatives transactions.
  6. Circus Swap

    A combination of an interest rate swap and a currency swap in ...
  1. How do futures contracts roll over?

    Learn about why futures contracts are often rolled over into forward month contracts prior to expiration, and understand ...
  2. Why do companies enter into futures contracts?

    Learn how companies use futures contracts for the purposes of hedging their exposure to price fluctuations as well as for ...
  3. What does a futures contract cost?

    Learn about values of futures contracts and the initial margin a trader must place in an account to open a futures position, ...
  4. What are the main risks associated with trading derivatives?

    Understand derivatives trading and learn about the primary risks usually associated with trading in the derivatives market, ...

You May Also Like

Related Tutorials
  1. Mutual Funds & ETFs

    Top ETFs And What They Track: A Tutorial

  2. Active Trading Fundamentals

    Introduction to Stock Trader Types

  3. Options & Futures

    Beginner's Guide To Trading Futures

  4. Trading Systems & Software

    Advanced Guide To NinjaTrader

  5. Trading Systems & Software

    Applying The MACD Indicator With MetaTrader 4

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!