stockstoshop e mini futures facts and news

Emini Facts

What is It?

E-Mini contracts are smaller electronically traded versions of the S&P 500 and NASDAQ 100 stock indexes. They are 1/5 the size of the larger institutional contracts. E-Minis are traded electronically on your PC.

Why Trade Them?

Volatility creates opportunity to earn much more with lower account balances
Broad market exposure for low cost
You can hedge against your own portfolio
You can be profitable regardless of market direction
Tax advantage compared to stocks

The Case for Trading Futures: The Traders Have Voted!

In a little over 4 years, since inception, average daily volume of the E-mini S&P 500 has grown from 11,000 contracts to nearly 240,000 contracts.

Trading Advantages

Ease of use versus stocks:

Totally electronic platform with fast, efficient fills and virtually 24-hour trading
“Round Trip” versus in-and-out commission
Monitoring a few key indexes vs. dozens of stocks thus eliminating traditional stock picking and associated risks such as:
- Pre-announcements
- and now…accounting minefields
Excellent profit potential

Futures traders care about only 2 things:
- an advancing market or
- a declining market.
Futures have more constant order flow and are usually much more friendly regarding bid/offer spreads.

What is 1 point of the E-mini NASDAQ 100 worth?

$20 per point per contract
For example: If the Nasdaq100 Index value is at 1800 and goes up 5 points to 1805 the difference is 5 points which equals $100.
$20 x 5 = $100 profit or loss per contract.

What is 1 point of the E-mini S&P 500 worth?

$50 per point per contract
For example: if the S&P 500 Index value is at 1500 and goes up 5 points to 1505 the difference is 5 points which equals $250.
$50 x 5 = $250 profit or loss per contract.

The Case for Trading Futures – Tax issues

Future are generally traded more favorably and receive “60/40” treatment. Equities require a longer holding period for favorable tax treatment.

Example:

Trader “A” makes $10,000 in profits over 1 week trading Intel

Trader “B” makes $9,800 in profits over 1 week trading E-minis

Which trader would you rather be? (assuming 39.6% bracket)