Index futures are futures contracts on a stock or financial index. For each index, there may be a different multiple for determining the price of the futures contract.
Why is a Future Contract different to other symbols available for trading?
POPULAR INDEX FUTURES
Within the United States, some of the most popular index futures are the mini Dow Jones (YM) and the mini Nasdaq (NQ) on the Chicago Board of Trade, and the mini Russell 2000 (ER2) and mini S&P 500 (ES) on the Chicago Mercantile Exchange.
Index futures are also available in foreign markets. This includes the DAX and the SMI index futures in Europe, and the Hang Seng Index future in Asia.
INDEX FUTURES CONTRACTS
An index futures contract states that the holder agrees to purchase an index at a particular price on a specified date in the future. If on that future date the price of the index is higher than the agreed-upon price in the contract, the holder has made a profit, and the seller suffers a loss. If the opposite is true, the holder suffers a loss, and the seller makes a profit.
Futures contracts are legally binding documents specifying the detailed agreement between the buyer and seller. It differs from an option in that a futures contract is considered an obligation, while an option is considered a right that may or may not be exercised.
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