- S&P E-mini Futures (ES): The S&P 500 E-mini futures contract is one of the most widely traded index futures, mirroring the performance of the S&P 500 index. Traders and investors utilize ES contracts to gain exposure to the 500 leading U.S. companies. Its popularity is attributed to its liquidity and correlation with the broader equity market.
- NASDAQ-100 Futures (NQ): NASDAQ-100 futures track the top 100 non-financial companies listed on the NASDAQ stock exchange. Investors often use NQ contracts to speculate on the technology sector’s performance, given the heavy representation of tech giants. The futures provide an avenue for both hedging and seeking alpha in the dynamic tech industry.
- Dow Jones Mini Futures (YM): Dow Jones Mini futures allow market participants to engage with Dow Jones Industrial Average, which consist of 30 large, blue-chip U.S. companies. Traders often use YM contracts for exposure to the industrial sector and gauge the overall health of the U.S. economy. The YM futures contract is valued at one-fifth of the Dow Jones Industrial Average.
- VIX (Volatility Index) Futures: VIX futures, often referred to as “fear gauge” futures are unique as they derive their value from the expected market volatility. Investors use these futures for hedging against sudden market downturns. A rising VIX indicates increased market uncertainty, making these futures valuable for risk management strategies.
Index Futures: How it Works, Types, Examples & Advantages