Market Insights

Futures were invented to trade agricultural products like wheat, but they’re now a key tool for stock investors. This article will cover some important points about the futures market for retail investors.

TradeStation gives customers access to key futures products tracking major equity indexes like the S&P 500, Nasdaq-100, Dow Jones Industrial Average and Russell 2000.

What Are Futures?

Futures work differently than stocks and exchange-traded funds. Traders don’t own them directly, but go “long” and “short.” Profits and losses accrue based on movements in the underlying index. (Longs make money to the upside and shorts benefit to the downside.)

Investors need a certain amount of capital to place trades (the initial margin requirement). Accounts also need to preserve minimum values to keep positions open (the maintenance margin requirement). These amounts vary for each futures product over time. Futures trade in dedicated accounts, apart from normal equity brokerage accounts.

Each futures contact tracks its underlying index differently. S&P 500 E-Mini futures gain or lose $50 for each point that the S&P 500 moves. Nasdaq-100 futures fluctuate by $20 per point.

Futures also have expiration dates, unlike stocks and exchange-traded funds. They cannot be traded after the expiration dates. Positions held to expiration will be automatically closed (because equity futures are cash-settled). The equity futures covered in this article all expire quarterly on the third Fridays of March, June, September and December.

Next, futures symbols include a root and their expiration. TradeStation also provides generic symbols combining the prices of multiple contracts over time. This makes historical charting easier. See the tables in this article for more.

Finally, remember that futures are complex instruments. Losses may exceed your initial investment. Customers should carefully study the specifications of different products and understand the risks before trading.

S&P 500 Futures

S&P 500 E-Minis are the most actively traded equity futures. They track the S&P 500 index, the most widely used measure of U.S. equity markets.

The S&P 500 has a broad exposure to industries. Technology is the largest sector, accounting for about one-quarter of its value. Healthcare and financials are the next-largest groups.

Nasdaq-100 Futures

Nasdaq-100 E-Minis track the Nasdaq-100, home to some of the largest and most active stocks like Apple (AAPL) and Tesla (TSLA). The Nasdaq-100 heavily focuses on growth companies and the the technology sector.

Just six companies account for almost half the index’s performance: AAPL, Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOGL), Meta Platforms (FB) and TSLA.

Dow Futures

Dow E-Minis track the Dow Jones Industrial Average, which holds just 30 stocks. Dow members tend to be larger and less volatile than other stocks. The Dow Jones Industrial Average has less exposure to technology than the S&P 500 and Nasdaq-100. Financials and healthcare are its top sectors.

Russell Futures

Russell 2000 E-Minis futures track the Russell 2000 index, which focuses on smaller companies. The Russell 2000 tends to be more volatile and economically sensitive than larger-cap benchmarks like the S&P 500 and Dow Jones Industrial Average.

Micro Futures

Given the popularity of E-Mini futures, CME introduced “micro” contracts in 2019. These are one-tenth the size of the E-Minis, giving investors more flexibility and scalability.

Micros have the same expirations and similar symbols as E-Minis. This table covers the four indexes outlined above: