- Chapter 2: Three Basic Futures Trading Strategies.
- Section 2: What's a Contract Worth?
- Section 3: What's a "Tick" Worth?
- Section 4: 100% Electronic.
- Section 5: What's the Current Price?
- Section 6: Trading Examples: #1 Day Trading the E-Mini Nasdaq 100.
- Section 7: Trading Examples: #2 Position Trading the E-Mini S&P 500.
- Section 8: E-Mini Nasdaq 100 vs. QQQQ's.
- Section 9: E-Mini S&P 500 vs. SPDR's
-
Section 10: The Power of Leverage.
- To Chapter 1
The Power of Leverage
II. Trading CME E-Mini Stock Index Futures: Section 10 of 10
Dollar profits and losses are similar, but the percentage of profit or loss is higher when trading E-mini stock index futures than trading index tracking stocks.
Take a look...
If Nasdaq-100 is trading at 2500, then:
E-MINI NASDAQ-100 FUTURES*
CONTRACT VALUE = $50,000 ($20 x 2500 = $50,000) ($62.50/SHARE* X 800 = $50,000)
PERFORMANCE BOND $8,250** MARGIN $25,000
And if Nasdaq-100 moves up 50 points to 2550, your dollar profit*** IS
| THE SAME PROFIT IS $1,000 ($20 x 50 = $1,000) (.025 x 2550 = $63.75/SHARE) |
THE SAME PROFIT IS $1,000 ($1.25 PROFIT/SHARE x 800 = $1,000) |
...but your percentage profit is
| HIGHER $1,000 PROFIT ON $8,250 = 12% |
LOWER $1,000 PROFIT ON $25,000 = 4% |
However, if Nasdaq-100 moves down 50 points to 2450, your loss is
| THE SAME LOSS IS $1,000 ($20 x -50 = $1,000) (.025 x 2450 = $61.25/SHARE) |
THE SAME LOSS IS $1,000 ($1.25 LOSS/SHARE x 800 = $1,000) |
...but your percentage loss is
| HIGHER $1,000 LOSS ON $8,250 = 12% |
LOWER $1,000 LOSS ON $25,000 = 4% |
* QQQQs are priced to approximate 1/40 (.025) the value of the Nasdaq-100
Index.
** As of year end 2000. Brokerage firms may require a larger initial performance
bond. CME initial performance and maintenance bonds may also vary over time.
*** Profits and losses do not include commissions and fees.
