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What Are E-mini S&P 500 Futures?

| March 8, 2024 | By

On March 4, 1957, the Standard and Poor’s 500 (S&P 500) equities index was unveiled on Wall Street. With an initial market capitalization of $172 billion, the S&P 500 closely monitored the largest companies from the industrial (425), railroad (15), and utility (60) sectors. Over time, the index became a go-to benchmark for U.S. equities market performance.

Throughout the majority of the 20th century, the S&P 500 drew the interest of the financial world. Eventually, it became the basis for many derivative products. To address public demand, the Chicago Mercantile Exchange (CME) launched S&P 500 futures for trade in 1982. The contract was the precursor for CME E-mini S&P 500 futures, which were initially listed in 1997.

Today, E-mini S&P futures are among the most frequently traded contracts in the world. Read on to learn more about this exciting product.

What Are E-mini S&P Futures?

When it comes to trading U.S. stock market derivatives, the E-mini S&P 500 is the industry standard. Featuring consistent market depth and volatility, E-mini S&P futures are a premier way of engaging the American equities markets.

The CME’s lineup of E-mini products provides traders with a way to customize their exposure to U.S. stocks. To accomplish this feat, E-minis feature reduced size and are tradable exclusively in the electronic format. Offerings such as the E-mini S&P 500, E-mini DOW, E-mini NASDAQ, or E-mini Russell 2000 are all available on the CME Globex platform.

Here are the contract specifications for the E-mini S&P 500:

  • Symbol: ES
  • Contract Unit: $50 x S&P 500 Index (U.S. Dollars and Cents)
  • Tick Size: 0.25 Index Points
  • Tick Value: $12.50
  • Settlement: Financial
  • Contract Months: March, June, September, December
  • Expiration: 9:30 a.m. EST, Third Friday of Contract Month

E-mini S&P futures are open for trade on the CME Globex 23 hours a day, five days a week. Session times run Sunday to Friday, 6:00 p.m. to 5:00 p.m. EST. Each session features a 15-minute trading halt from 4:15 p.m. to 4:30 p.m. EST.

One of the premier calling cards of futures is volatility. Because contracts are leveraged financial instruments, swings in pricing can be magnified. This is certainly true for the E-mini S&P 500. If U.S. large-cap stocks spike or crash, the action is often even more extreme.

To manage periods of extraordinary volatility, the CME has put multiple circuit breakers in place. A circuit breaker ceases trade when the market hits a predetermined price limit. For E-mini S&P futures, circuit breakers are placed accordingly:

  • Market hours: Trade is temporarily halted when the downside price limits of 7 percent and 13 percent are hit; trade is suspended for the session when the daily 20 percent price limit is hit.
  • Overnight (5:30 p.m. to 8:30 a.m. EST): Trade is temporarily halted if price moves up or down 7 percent. Prices are not to be allowed to exceed the 20 percent daily limit.

Price limits are fixed according to the previous day’s volume-weighted price average (VWAP) calculated during the final 30 seconds of trade (2:59:30 p.m. to 3:00:00 p.m. CST).

Trade U.S. Large Caps with CME E-mini S&P 500 Futures

For more than two decades, traders from around the globe have engaged U.S. large-cap stocks via CME E-mini S&P futures. Through boom or bust, this contract has provided successful traders and investors with countless opportunities. Are you ready to join their ranks?

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