E-mini NASDAQ-100 futures

 
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The NASDAQ-100 e-mini futures are futures contracts on the NASDAQ 100 index. Effectively, they are a way to invest in the NASDAQ 100. These contracts traded on the Chicago Mercantile Exchange. These contracts are traded 24 hours a day on the CME Globex exchange.

The notional value of each contract is US$20 times the value of the NASDAQ 100 stock index, which means that an investor holding one of these contract will profit (or lose) $20 for every 1 point change on the NASDAQ 100 index. When the NASDAQ 100 is at 1300, each of these contracts is worth $20*1300 = $26,000. An investor does not have to pay the entire amount to hold these contracts; CME guidelines suggest that an investor needs anywhere between 5%-20% as collateral for these contracts.[1]

Unlike ETFs, such as the SPDR funds, the e-mini futures are not backed by stocks. Hence an investor does not get the dividends on the underlying stocks. Instead, these contracts are backed by a counter-party who takes the opposite position on these futures.

Launched in 1997, these contracts have become extremely popular with investors. As of December 2004, on average over 300,000 of these contracts were traded every day.[2]


References

  1. Chicago Mercantile Exchange, retrieved November 14, 2008
  2. Chicago Mercantile Exchange, retrieved November 14, 2008
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