Facts About the S&P 500 Index
The S&P 500 Index represents about 70% of total domestic U.S. equity market capitalisation. S&P identifies important industry sectors within the U.S. equity market. The Index is capitalisation weighted (shares outstanding times stock price); each company’s influence on Index performance is directly proportional to its current market value. The daily Index values reported in the media are exclusive of dividend income, i.e. they reflect only price action of the underlying component stocks.

What Are Mini S&P 500 Futures?
Mini S&P 500 futures are legally binding agreements to buy or sell the cash value of the S&P 500 Index at a specific future date. The contracts are valued at US$50 x the futures price. For example, if the Mini S&P 500 futures price is at 900.00, the value of the contract is US$45,000 (US$50 x 900.00). The minimum price movement of the futures or options contracts is called a “tick.” The tick value is .25 index points, or US$12.50 per contract. This means that if the futures contract moves the minimum price increment (one tick), say, from 1300.00 to 1300.25, a long (buying) position would be credited US$12.50; a short (selling) position would be debited US$12.50. All futures positions (and all short option positions) require posting of a performance bond (or margin). Positions are marked-to-the-market daily. Additional deposits into the margin account may be required beyond the initial amount if your position moves against you. Mini S&P 500 contracts are cash settled, just like the Standard S&P 500; there is no delivery of the individual stocks. Even better, Mini S&P 500 daily settlements and quarterly expirations will use the exact same price as the S&P 500. The same daily settlement prices allow Mini contracts to benefit from the liquidity of the S&P 500 futures.

Why Trade Them?
E-minis are the latest stock market and wealth creation products designed for the active stock trader who wants to trade electronically and for the short term, and likes to have the utmost control and highest profit potential. You can use E-minis stock index futures to:

• Actively trade stock indexes
• Hedge your portfolio or other investments
• Gain broad market exposure, at relatively low cost
• Equities investors like the great “tradability” of these products. Besides having very tight bid/offer spreads, they are:
• Highly liquid
• High leverage
• No uptick rule, easy to short
• 100% electronic – no trading pits and brokers
• Sized for the individual investor
• Fast moving, exciting and stimulating to trade
• Backed by a strong financial safeguard system
• 60/40 short-term tax advantage
• Scandal and corruption free
• Monitoring only one index instead of dozens of stocks
• Less time consuming

And because these E-minis are futures, they offer some unique additional features:
• The capital requirement to trade is very low relative to stock margin requirements (minimum US$2,000)
• Returns can be quite substantial, and
• You have the opportunity for profitable wealth creation trading strategies regardless of the market direction or volatility

You can trade E-minis stock contracts as a day trader, simply with an eye to making a profit. But you can also use them as hedging tools or to get a particular kind of market exposure. For example, you may decide to sell these contracts if you think the market will be bearish, but you don’t want to disrupt your portfolio by selling off a large number of stocks. Or, you may buy them if you think the market will be bullish in the near future, but you don’t want to purchase additional shares of a particular stock at that time.