What is the 'S&P 500 Mini'

The E-mini S&P 500 is an electronically traded futures contract on the Chicago Mercantile Exchange representing one fifth of the value of the standard S&P 500 futures contract.

E-mini contracts are also available on a wide range of indexes such as the Nasdaq 100, S&P 500, S&P MidCap 400 and Russell 2000, as well as commodities such as gold and currencies such as the euro.

BREAKING DOWN 'S&P 500 Mini'

The Standard & Poor's 500 Index - S&P 500 is an index tracking the 500 largest U.S. publicly traded companies by market value. The S&P 500 is a market value or market capitalization weighted index and one of the most common benchmarks for the broader U.S. equity markets.

All futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash.

The value of the full-sized S&P 500 contract had become too large for most small traders so the first E-mini contract – the E-mini S&P 500 – began trading on September 9, 1997. Its value was one fifth that of the full-sized contract.

 

The E-mini made futures trading accessible to more traders. It quickly became a success, and today there are E-mini contracts that cover a variety of indexes, commodities and currencies. The E-mini S&P 500, however, remains the most actively traded E-mini contract in the world.

The daily settlement prices for the E-minis are essentially the same as those of the regular-sized contract, though they may differ slightly because of rounding (resulting from differences in the minimum tick sizes between the E-mini contracts and full-sized contracts). 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. 

 

The contract size is the value of the contract based on the price of the futures contract times a contract-specific multiplier. The E-mini S&P 500, for example, has a contract size of $50 times the S&P 500 Index. If the S&P 500 is trading at 2,580, the value of the contract would be $129,000 ($50 x 2,580).

Because e-minis offer round-the-clock trading, low margin rates, volatility, liquidity and greater affordability, they are ideal trading instruments for active traders.

 

E-minis vs. Full-Sized Futures

There really is nothing a full-sized contract can do that an E-mini cannot do. Both are valuable tools traders and investors use for speculating and for hedging. The only difference being that smaller players can participate with smaller commitments of money using E-minis.

All futures strategies are possible with E-minis, including spread trading. And E-minis are now so popular that their trading volumes area significantly greater than those of full-sized futures contracts. In fact, the E-mini S&P 500 overtook its larger sibling in trading activity in 2009.

RELATED TERMS
  1. Mini Forex Account

    A mini forex account is a foreign exchange account that allows ...
  2. Index Futures

    A futures contract on a stock or financial index. For each index ...
  3. Contract Market

    Any board of trade designated to trade a specific options or ...
  4. Options On Futures

    An option on futures gives the holder the right, but not the ...
  5. Expiration Time

    The expiration time of an options contract is the date and time ...
  6. Front Month

    Front month refers to the futures contract in each market with ...
Related Articles
  1. Trading

    Mini Options: A Useful Tool For Trading High-Priced Securities

    Mini options are option contracts wherein the underlying security is 10 shares of a stock or exchange-traded fund (ETF). This is the main difference between mini options and standard options, ...
  2. Trading

    Minis Provide Low-Cost Entry To Futures Market

    These contracts provide access to commodities without a huge capital commitment.
  3. Investing

    HP Unveils Powerful Z2 Mini Workstation for CAD

    HP Inc. (NYSE: HPQ) on Wednesday took the wraps off what it's billing as the first mini workstation ever designed for the computer-aided design (CAD) industry: the HP Z2 Mini Workstation.   ...
  4. Trading

    Forex Basics: Setting Up An Account

    The line between profitable forex trading and ending up in the red may be as simple as choosing the right account.
  5. Trading

    The Difference Between Forwards and Futures

    Both forward and futures contracts allow investors to buy or sell an asset at a specific time and price.
  6. Investing

    3 Reasons to Use ETF Options Over Futures (SPY, QQQ)

    Learn about exchange-traded fund (ETF) options and index futures, and why it might be a better decision to use ETF options instead of futures.
  7. Investing

    4 Strategies to Short the S&P 500 Index (SPY)

    Learn the advantages and disadvantages of methods available to investors with the objective of making a bearish bet on the S&P 500 Index.
  8. Investing

    A Quick Guide for Futures Quotes

    Here is a quick guide for reading and understanding futures markets quotes.
  9. Trading

    Options On Futures: A World Of Potential Profit

    There's one simple hurdle in the transition from stock to futures options: learning about product specifications.
RELATED FAQS
  1. How do S&P 500 futures work?

    Learn about the mechanics of S&P 500 futures contracts, a type of stock index future introduced by the Chicago Mercantile ... Read Answer >>
  2. What is the difference between derivatives and options?

    A derivative is a financial contract that gets its value from an underlying asset. Options offer one type of common derivative. Read Answer >>
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  3. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  4. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  5. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  6. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
Trading Center