Micro E-Mini Futures Contracts

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Narrator: In May 2019, the CME Group launched Micro E-mini futures contracts on four major U.S. stock indices: the S&P 500^®, Nasdaq-100^®, Dow Jones Industrial Average^®, and Russell 2000^®. These micro contracts provide futures traders another way to trade the U.S. stock market. The micros are a fraction of the size of standard e-mini contracts and require significantly less capital to trade. However, they include the same benefits and risks of their classic e-mini counterparts.

The rationale behind the new micros is similar to that of the original E-mini S&P 500 futures contract CME Group launched in 1999. As the value of stock market indices rose, so did the notional value of stock index futures. As a result, the amount of capital needed to trade these products grew.

To once again make stock market index futures more accessible to retail futures traders, CME launched Micro E-mini futures, which are one-tenth the size of their e-mini counterparts. These products allow traders to speculate on stock market indices without taking on the larger dollar risk of standard e-minis. Traders can also hedge a smaller portfolio with these products.

Starting with the Micro E-mini S&P 500, this contract gives traders exposure to U.S. large-cap stocks, a leading barometer of the U.S. stock market. Symbol forward slash MES, this contract has a multiplier of $5 versus the $50 multiplier of the ES. With a minimum tick of a quarter point, the dollar value of one tick is equal to $1.25, which means a full one-point move in the Micro ES is worth $5.

For comparison, the dollar value of one tick for the ES is equal to $12.50, which means a full one-point move is worth $50. If the S&P 500 gained 20 points, the ES would gain $1,000, whereas the micro contract would only be up $100.

Moving on, the Micro E-mini Nasdaq-100 contract provides exposure to the largest nonfinancial companies on the Nasdaq. Symbol forward slash MNQ, this contract has a multiplier of $2, and a minimum tick of a quarter point, thus making its dollar value for one tick equal to $0.50. A full one point move in the MNQ is equal to $2 versus $20 for the standard NQ contract.

Next up is the Micro E-mini Dow. This contract gives traders exposure to 30 U.S. blue chip companies. Symbol forward slash MYM, this contract has a multiplier of $0.50 and a minimum tick value of $1. This means the dollar value for one tick is also equal to its per tick value of $0.50.

And finally, there's the Micro E-mini Russell 2000. This contract gives traders exposure to 2,000 U.S. small-cap stocks and is the leading small-cap benchmark. Symbol forward slash M2K, this contract has a multiplier of $5. Its minimum tick is one-tenth of a point, which means the dollar value of one tick is equal to $0.50. If the M2K moves one full point, traders would gain or lose $5 versus $50 if they were trading the standard E-mini Russell 2000.

To enter any futures position, traders must put up a margin requirement, which is only a fraction of the contract's value. For each micro contract, the margin is one-tenth the size of larger e-minis. And just like standard e-minis, micro contracts trade from Sunday at 5 p.m. Central time to Friday at 4 p.m. Central time, virtually 24 hours per day.

Keep in mind that futures carry unique and significant risks that you should understand before trading. Although, futures trading is not suitable for everyone, Micro E-minis offer a more accessible way for informed futures traders to potentially profit from the futures market.

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