S&P Futures (Part II)

Regular trading hours for S&P futures contracts are from 8:30 A.M to 3:15 PM. S&P futures contracts are another example of how 24 hours a day trading enables traders to respond to economic news releases in pre-market and after-market sessions. S&P futures contracts are valued in ticks worth 0.1 index points or $25.

The evening session continues on the Globex until 8:15 AM overnight. It starts at 3:30 PM (15 minutes after the close at 3.15 PM). Individual S&P futures contract holders are limited to no more than 20,000 net long or short contracts at any one time.

A procedure is set in place to halt trading if the index experiences major declines or increases beyond certain limits. Circuit breakers are triggered if these price limits are crossed. The limits are set on quarterly basis. A price limit is how far an S&P futures contract can rise or fall in a single trading session.

Collar Rule: What the collar rule does is limit the chance of huge gains or losses as a result of futures trading. The collar rule limits the traders from piling buy or sell orders in an attempt to exaggerate the gains or losses of the market. It addresses price swings related to program trades that move the Dow Jones Industrial Average (DJIA) more than 2% by requiring index arbitrage orders, or orders that bet on the spread between the futures and the cash of stock indexes to be stabilizing.

Especially during slow seasons in the stock market such as summer, fall and around the winter holidays, overnight or pre-market trading can be thin and dangerous. Its time to learn how an S&P futures contract ticks once you have mastered futures basics such as the performance bond margins, the mark to market requirements and the account specifics.

CMEs most actively traded contracts are S&P futures including the E-minis and Eurodollar futures. There are hundreds of futures contracts that trade on the federally regulated futures exchanges in the United States. Each of these exchanges trade futures contract that are somewhat unique to it.

E-mini S&P Futures contracts: The E-mini S&P futures contracts (ES) are the favorites of the day traders because of its high intraday price volatility and major price swings on a daily basis. The E-mini S&P futures contracts (ES) are among the most popular stock index futures contract because they enable you to trade the markets trend with only one fifth of the requirement.

One tick on E-min S&P futures contract is equal to 0.25 of the index point or $12.50. The value of the E-mini S&P futures contract is $50 times the value of the S&P 500 stock index. The E-mini S&P futures contract can be very volatile and can move even more aggressively during times of extreme market volatility.

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading futures and currencies. Trade Dow Futures and S&P Futures!

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