• WHEN A NEW FUTURES CON TRAC T IS
launched, it usually takes months or years
to get noticed. But some contracts attract
attention quickly. In the spring of 2019,
when CME Group introduced bite-size versions of four top equity indices—the S&P
500 (SPX), Nasdaq 100 (NDX), Dow Jones
Industrial Average ($DJI), and the Russell
2000 (RUT)—retail traders and investors
appeared to jump on board from day one.
If you haven’t caught wind of the action,
here are some things you should know
about CME Micro E-mini futures.
THEY MAY SOUND SMALL, BUT …
After a decade-long bull market, SPX, $DJI,
and RUT quadrupled from their financial crisis lows, while NDX rose sevenfold. Even the
e-mini contracts got a little too rich. The new
micros are 1/10 the size of the corresponding
e-minis, which means they’re 1/10 the tick
value and 1/10 the margin requirement.
Think of it as ‘right-sizing’ for today’s
futures trader. Remember when the
e-minis were launched in the late ’90s?
This happened for kind of for the same
MICRO E-MINI FUTURES:
reasons—a long bull market pushed
notional values up so much they became
out of reach for some traders.
FOUR WAYS TO PLAY
Dip one toe in the water. If you’re an
experienced trader and want to venture into
the world of futures, micros, with their $5
tick size and smaller margins, could be one
way to ease yourself in without going “all in.”
Pairs trading. Each index has di;erent
components and serves a di;erent purpose.
First it was the minis;
now it’s the micros.
And the micros may
give sidelined traders
more of a reason to
trade with futures.
Learn more at
IN THE MONEY