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Trading Small Cap Stocks with E-Mini Russell 2000 Futures


If you’re interested in maximizing risk and reward, look no further than the Russell 2000 index. Comprising equity offerings nicknamed the “small caps,” this asset class features the utmost in growth potential for the U.S. equities markets. If you’re an aspiring futures market gunslinger, Micro E-mini and E-mini Russell 2000 futures listed on the Chicago Mercantile Exchange (CME) may be just the markets for you.

What Is the Russell 2000?

By definition, a small cap stock is one with an aggregate market capitalization that falls between US$250 million and US$2 billion. Accordingly, the Russell 2000 features the lower 2,000 offerings of the broader Russell 3000 index―the crème de la crème of American small caps.

The beauty of the Russell 2000 is that it provides maximum exposure to the growth potential of U.S. stocks. A few leading components of the index are Conformis Inc. (CFMS), Digital Turbine Inc. (APPS), and Kodiak Sciences Inc. (KOD). If these names fail to ring a bell, don’t worry. Remember, Russell 2000 companies are up-and-comers, not the Apples (AAPL) and Amazons (AMZN) of the world.

Whereas stock trading is great for traditional buy-and-hold investors, equities index futures are ideal for active traders. The E-mini DOW 30, E-mini S&P 500, and E-mini NASDAQ 100 are fantastic offerings for those interested in tracking the major U.S. stock indices. However, for people who have a receptive attitude toward risk and have their sights set on extraordinary rewards, the Russell 2000 is the quintessential trading venue.

COVID-19 and the Russell 2000

Wherever there are large returns, there’s added risk. And if we’ve learned anything from the COVID-19 pandemic of 2020, it’s that unimaginable market moves are possible. In the case of the Russell 2000 Index, Q1 and Q2 2020 featured unprecedented volatility and a historically wide trading range.

Amid the COVID-19 pandemic, the Russell 2000 was a textbook example of an “unhinged” market. According to the Financial Times, approximately 42 percent of Russell 2000 companies failed to turn a year-over-year profit following the early stages of the 2020 COVID-19 pandemic.

Going into Jan. 1, 2020, this was an unthinkable statistic. However, global lockdowns fostered an unprecedented economic downturn, prompting Russell 2000 futures to struggle mightily. In fact, during March 2020, September E-mini Russell 2000 futures plunged by 22.5 percent, pacing losses of the E-mini DOW, E-mini S&P 500, and E-mini NASDAQ.

In turbulent markets, it’s all about selecting the proper leverage for any given trade. To do so in the American equities indices, both the Micro E-mini and E-mini Russell 2000 are useful. Here’s a look at the key contract specifications of each:

Contract Symbol Tick Value Intraday Margin
E-mini Russell 2000 RTY $5.00 $1,000.00
Micro E-mini Russell 2000 M2K $0.50 $100.00

One of the great things about futures trading is that there’s a market and a product for everyone. No matter your capital resources, trading Russell 2000 futures during spring 2020 was possible via the E-mini Russell 2000 or Micro E-mini 2000.

Interested in Learning More About Russell 2000 Futures?

In the modern marketplace, risk management is a science. Subsequently, stocks, bonds, currencies, and futures are common components of most diversified portfolios. Nonetheless, if you’re interested in pursuing extraordinary returns via U.S. equities, look no further than E-mini or E-micro Russell 2000 futures.

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