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.
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:
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:
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).
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?