This article about Emini futures is the second in a series. Click here to see the first article and watch a video on why to trade Emini futures.
The S&P500 Emini is a futures contract that tracks the S&P500 index. It is traded on the Chicago Mercantile Exchange (CME) via their Globex electronic platform. Trading is 23 ½ hours a day, 5 days a week, using the symbol ES.
Emini Futures: Now Over 10 Years Old
The Emini futures contract was launched in September 1997 to attract non-professional investors into trading index futures. The CME did this by making the contract 1/5th the size of the standard S&P500 futures contract, therefore, requiring only 1/5th the margin to trade.
Emini margin requirements vary by broker and whether you are day trading or position trading, but are approximately US$2,250 per contract to open a day trade and US$4,500 per contract to open an overnight position. Margin requirements have recently been increased because of volatility in the underlying S&P500 index.
Emini Futures: Advantages of Trading
Emini futures have a number of advantages for traders:
- Lower margin requirements than the full-size contract
- Round-the-clock electronic trading platform (Globex)
- High liquidity and, therefore, minimal slippage and tight bid/offer spreads
- Ability to go long (buy) and short (sell) with no up-tick rule
- Large volatility and high leverage
- Very low brokerage commissions
- Lower tax rate (for US traders), and
- Minimal tax reporting requirements
Over the years I have traded almost every possible security: stocks, options, commodities, futures, forex, mutual funds, IPOs, ETFs, etc. But a few years ago I finally found what I consider to be the ideal trading vehicle – the S&P500 Emini futures. I trade it exclusively now and haven't looked back since.
Emini Futures: Now Hugely Popular
S&P500 Emini Futures (Monthly Volume)
As a result of these advantages, Emini futures have been a huge success with both non-professional and professional traders. Trading volumes have increased rapidly as the chart above shows. Monthly volumes are now averaging over 40 million contracts and the average daily volume is now more than 2 million contracts.
By contrast, the original large S&P only does about 0.5 million contracts a month – equivalent to 2.5 million Emini contracts when you adjust for margin requirements.
Emini Futures: Bigger than the Large S&P Futures Contract
Emini Futures Now the Largest Index Trading Vehicle (adjusted open interest, monthly)
The chart above shows that during 2009 Emini futures overtook the large SP contract to become the largest component of the equity index futures market with just over 50% of total open interest.
I've adjusted all the contracts for their relative margin size – so the Emini futures open interest data is divided by 5 so it's directly comparable with the SP contract, etc.
Emini Futures: The Other Varieties
Other Emini Futures (Monthly Volume)
With the success of S&P500 Emini futures the CME (and other exchanges) decided to launch other “Emini” futures contracts covering additional US indices and commodities. These other Emini futures varieties include:
- NASDAQ 100 (symbol NQ, 100 largest NASDAQ companies)
- NASDAQ Composite (symbol QN, all 3,000+ NASDAQ companies)
- NASDAQ Biotech (symbol BQ)
- S&P Midcap 400 (symbol EMD)
- Dow (symbol YM, traded on CBOT exchange)
- Russell 2000 (symbol TF, traded on NYBOT/ICE exchange, small cap index, formerly ER2 traded on CME)
- Russell 1000 (symbol RF2, traded on NYBOT/ICE exchange, 1,000 largest cap companies, formerly RS traded on CME)
- Natural gas, light sweet crude, heating oil and unleaded gasoline
However, S&P500 Emini futures continue to dominate index futures as the chart above of monthly trading volumes shows. On this site when I use the word Emini I am referring to the S&P500 Emini futures contract.
Emini Futures: Other Useful Facts
Other S&P500 Emini futures facts and details:
- Each 1 index point move is worth US$50 per contract
- The minimum move of the futures contract (tick size) is 0.25 index points or US$12.50 per contract
- Weekly trading opens on Sunday at 5pm and closes on Friday at 3:15pm (CST)
- Day session trading opens on weekdays at 8:30am, closes briefly at 3:15pm and then re-opens at 3:30pm (CST)
- Scheduled maintenance Monday to Thursday between 4:30pm and 5:00pm (CST)
- Emini futures contracts expire quarterly in March, June, September and December, denoted by the letters “H”, “M”, “U”, “Z” respectively and so ES06H is the symbol for an S&P500 Emini futures contract that expires in March 2006
- Contract expiry is on the 3rd Friday of March, June, September and December
- Contract rollover – when the majority of trading moves to the next contract – is on the 2nd Thursday of March, June, September and December
I hope you found this Emini futures article helpful. Click the link below to see why the Emini-Watch.com methodology is different and how to trade Emini futures.
