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Index Futures

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Index futures are futures markets where the underlying commodity is a stock index, such as the Dow Jones, or the FTSE100. Stock indexes cannot be traded directly, so futures based upon stock indexes are the primary way of trading stock indexes. Index futures are essentially the same as all other futures markets (currency and commodity futures markets), and are traded in exactly the same way.

Settlement and Delivery

As index futures are based upon the prices of many separate companies, they are usually settled in cash, rather then delivery of the underlying stock certificates. This means that if a trader is holding a futures contract when it expires, their profit or loss will be calculated using the final settlement price determined by the exchange, and their trading account will be adjusted by their profit or loss.

Popular Index Futures

Some of the most popular futures markets are those that are based upon stock indexes, including the following US, European, and Asian markets:

US Index Futures

  • YM - The mini Dow Jones index future of ECBOT (Chicago Board of Trade)
  • NQ - The mini Nasdaq index future of ECBOT (Chicago Board of Trade)
  • ES - The mini S & P 500 index future of Globex (Chicago Mercantile Exchange)
  • ER2 - The mini Russell 2000 index future of Globex (Chicago Mercantile Exchange)

European Index Futures

  • DAX - The DAX index future of the DTB (Deutsche Boerse)
  • CAC40 - The CAC40 index future of MONEP (Euronext Paris)
  • SMI - The SMI index future of SOFFEX (Eurex Switzerland)
  • Z - The FTSE100 index future of LIFFE (London International Futures Exchange)

Asian Index Futures

  • HSI - The Hang Seng index future of the HKFE (Hong Kong Exchanges and Clearing)
  • SPI - The Australian Stock Exchange 200 index future of SNFE (Sydney Futures Exchange)

Market Profiles

Complete descriptions of many of the above index futures, including the companies that make up the underlying index, the futures contract specifications, and the market holidays, are available in their Market Profiles.

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