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: Popular E-mini Contracts
  6. Beginner's Guide To E-Mini Futures Contracts: Who Trades The E-Minis?
  7. Beginner's Guide To E-Mini Futures Contracts: Trading The E-Minis
  8. Beginner's Guide To E-Mini Futures Contracts: Other E-Mini Contracts
  9. Beginner's Guide To E-Mini Futures Contracts: Volume and Volatility
  10. Beginner's Guide To E-Mini Futures Contracts: Margins
  11. Beginner's Guide to E-Mini Futures Contracts: Rollover Dates and Expiration
  12. Beginner's Guide To E-Mini Futures Contracts: Brokers
  13. Beginner's Guide To E-Mini Futures Contracts: Tax Advantages

What is an e-mini?

An e-mini is an electronically traded futures contract that represents a fraction of the value of a related standard futures contract. 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 encouraged 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. 

As futures contracts, e-minis represent agreements to buy or sell the cash value of an underlying contract at a specified date in the future. Each contract is sized at a certain value multiplied by the underlying contract’s price. 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). Like stocks, the value of the contract changes throughout the trading session in response to economic events and market activity.

Types of e-minis

While the e-mini S&P 500 is the most popular contract, other e-minis are available that cover a range of products, including indexes, metals, forex and commodities. Generally, however, when investors and traders discuss e-minis, they are usually referring to the e-mini stock index futures contracts – and in particular, the e-mini S&P 500. 

A stock index is a statistical measure that reflects the composite value of a selected group of stocks. The S&P 500, for example, is an index that includes 500 stocks chosen for market size, liquidity and industry grouping. The Dow Jones Industrial Average (DJIA), on the other hand, is an index made up of 30 of the largest and most influential companies in the U.S.

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 practical trading instruments. Each stock index future trades on a multiple of the underlying cash index, and because they are not based on a tangible commodity – such as corn or wheat – they are always settled in cash. (For related reading, see Index Investing.)

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 most popular e-mini stock index futures contracts include:

  • E-mini S&P 500 (ES)
  • E-mini NASDAQ-100 (NQ)
  • E-mini Dow (YM)
  • E-mini Russell 2000 (RTY)

All these contracts trade on the electronic CME Globex platform.

 


Beginner's Guide To E-Mini Futures Contracts: E-Mini Characteristics
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