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| What is an emini? In the specialized Derivative trading world E-Minis, which are small Futures Contracts on the S&P500 Index, the NASDAQ 100 Index and the Dow 30 index. Trading index futures enables you to participate in broad market moves with one trading decision, without having to select individual issues. Index futures and options contracts closely follow the price movement of their respective underlying indexes. These products are widely used by financial professionals as well as individual investors, for hedging or portfolio protection as well as speculation investment reward. Trading E-Minis offers up to 10 to 1 leverage and virtually 24/5 trading hours. With more and more volume emini's are becoming more and more liquid every trading quarter. E-minis Versus "Big" Full Size Futures Contracts While better-resourced individuals and institutions participate by trading the S&P futures, the $23,000-plus margin per contract required to trade the "big" S&P 500 futures is not possible. The explosive growth in the value of the S&P 500 futures has put the contract beyond the reach of many individual investors. Only institutional investors look at the big contract the hedge their positions. However the E-mini S&P 500 is a reduced version of the S&P futures that lets traders get in on the fast action of the electronically screen based traded futures contract. CME, Eurex, LIFFE, and CBOT are exchanges that offer eminis. The E-mini S&P 500 contract is for both new and experienced traders. But its smaller size was designed with the individual investor in mind. The contract value is 50 times the underlying index, just 1/5 the size of the “full size” contract. For example, if the underlying S&P 500 futures is 1400.00, then one contract has a value of $70,000. With the E-mini, a trader never actually owns any of the component stocks of the S&P 500 index. The E-mini, like all futures contracts, are legally binding agreements to buy or sell the cash value of the contract at a specific future date. All E-mini contracts are settled in cash, called offset, where a buy position is closed by a sell position, or vice versa. Futures contracts are “marked-to-market” meaning margin accounts are adjusted daily to reflect profits and losses. If there is a net gain on any given day, it is noted in the account at the end of the day. Conversely, if there is a loss, it too is marked to the market and reflected in the account at the end of the day. |
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