Introduction

What are Stock Index Futures?
Stock Index Futures are contracts to buy or sell the value of a specific stock index at a specific price on a specific date. Stock Index Futures are traded in terms of number of contracts. Stock Index Futures closely follow the price movement of the underlying indexes.

If you initiate to purchase an Index Futures contract, you hope to gain if price of the contract increases. On the other hand, a short position may be taken if you hope to gain from futures price declines. According to less number of contracts involved to get into the market, trading stock index futures could be more efficient than trading equity securities.

Why trade Stock Index Futures?

1. A fast, cost-effective way to actively trade products that track the stock indexes
2. The equivalent of broad market exposure to a variety of major stock indexes
3. Substantial liquidity in terms of large open interest, volume and tight bid/offer spreads
4. Online access available around the globe and virtually around-the-clock throughout the trading week
5. Potentially lower trading costs compared to trading a basket of equities
6. Eliminating the hassle of stock picking
7. Speculations – Day traders and position traders trade Stock Index Futures to speculate on the price fluctuation of the stock market
8. Managing risk and hedging – Financial professionals, such as pension and mutual fund managers, typically use Index futures for managing risk and hedging portfolios against adverse price moves

Advantages of Stock Index Futures

Difference between trading Stock Index Futures and Stock Indexes

Stock Index Futures Contracts available at Phillip Futures