One of the benefits of trading futures is that you have a global toolbox to take advantage of an outlook on nearly any market. Often traders get focused on only a couple of the most popular or familiar contracts, but there are a wide range of markets you can consider. The more tools you have at your disposal, the better you can diversify yourself as an investor. Further, with global stock index contracts, you can speculate on changing economic conditions on a global scale and isolate fiscal or monetary policy change in specific countries too.

You can trade a wide range of global stock indexes as a Lind-Waldock client, and from a trader’s perspective, it doesn’t really matter what exchange your trade takes place on. With Lind-Waldock’s electronic trading platforms and our personal service, you get near-seamless access to markets around the world. I’ll explore some global stock index futures contracts you might not be aware of.  The most popular stock index futures contract is based on the S&P 500, so that’s where we’ll start. Like all futures markets, you can trade your opinion on whether the market will move up or down, by going long or short.

Please note that contract values are approximate and change with market conditions. Margins listed here are also subject to change without notice at any time. 

E-Mini S&P 500
Description: The primary benchmark of U.S. large-cap equities
Exchange: CME Group www.cmegroup.com
Symbol: ES
Size: $50 x S&P 500 index (approximate notional value $55,000 USD)
Open interest: 2,795,293
Margin: $5,625

Most traders are familiar with the S&P 500 futures contract, regarded as the largest and most liquid index futures product in the world today. If you have a large trade, you can get it done here, and that makes it a favorite of both individual and institutional investors.  The E-mini contract is sized for individual investors and smaller traders, while large institutions or more highly capitalized investors also trade the “big” S&P 500 contract with a larger contract size of $250 times the index.

E-Mini Nasdaq 100
Description: Benchmark for NASDAQ stocks, typically science and technology
Exchange: CME Group www.cmegroup.com
Symbol: NQ
Size $20 x Nasdaq Index (approximately $36,000 USD notional value)
Open interest: 390,731
Margin: $3,500

Nasdaq 100 futures were more popular during the technology boom of the late 1990s than they are today, but still have respectable volume and open interest. The index is heavy in technology and science stocks, so if you have an opinion on that sector of the market, this might be a good index to trade that view.

E-Mini S&P MidCap 400
Description: U.S. mid-cap stocks
Exchange: CME Group www.cmegroup.com
Size: $100 x S&P MidCap 400 Index (approximately $73,000 USD notional value)

If you have an opinion about mid-cap stocks, this is a great vehicle to diversify your portfolio. You can also use this product for spread trades with other stock index products if you think mid-caps will outperform or underperform large- or small-cap stocks.

Mini Russell 1000
Description: U.S. large-cap stocks
Exchange: ICE Futures Exchange www.theice.com
Symbol: RF
Size $100 x Russell 1000 Index (approximately $60,000 USD notional value)
Open Interest: 21,438

Mini Russell 2000
Description: U.S. small-cap stocks
Exchange: ICE Futures Exchange www.theice.com
Symbol: TF
Size: $100 x Russell 2000 Index (approximately $62,000 USD notional)
Open Interest: 390,894

The Russell 1,000 and 2,000 futures contacts are interesting in that they are two segments of the Russell 3,000 index, a broad index of 3,000 stocks institutional investors have favored as a benchmark of the overall market. The two Russell futures contracts can be traded separately, together, or as a spread with each other or other indexes. An example of one interesting strategy might be based on the so-called “January Effect.” If you think small-cap stocks will outperform the large-cap stocks in the market, you could buy the Russell 2,000 contract and sell the Russell 1,000.

E-Mini Dow Jones
Description: Dow Jones Industrial Index 30
Exchange: CME Group www.cmegroup.com
Symbol: YM
Size $5 x DJIA (approximately $51,500 USD notional)
Open Interest: 67,111
Margin: $6,500

The Dow Jones Industrial Average, created by Charles Dow in 1896, is regarded as one of the oldest stock indexes in existence today, although futures on the DJIA came about later, in the 1990s. While the DJIA is not as broad as the S&P 500 (the DJIA is based on 30 stocks), it is a well-known barometer of the U.S. economy. The DJIA futures contract is not as popular as the S&P 500 futures contract, but it’s a liquid contract with good open interest. A $25 DJIA futures contract is also available for larger traders.

Mini MSCI Emerging Markets
Description: MSCI Emerging Markets Index (25 emerging markets)
Exchange: CME Group www.cmegroup.com
Symbol: EMI
Size: $50 x MSCI Emerging Markets Index (approximately $51,500 USD notional)

The MSCI Emerging Markets Index is not very actively traded, but certainly there is enough open interest for individual traders to consider. It offers a very broad outlook of global stocks, representing a variety of emerging countries around the world. Brazil, Russia, India and China (the “BRIC”) are represented, as are Mexico, South Africa, Egypt, Turkey, Poland and others.

You should certainly consider this index futures product if you have an option on whether the emerging market has more to gain in terms of economic performance in the 21st Century. There is a tremendous amount of growth occurring in these countries. Korea has the highest weighing at 16 percent. You can see the countries in the index and weightings in the graphic below.

S&P TSX 60 Index
Description: Canadian large-cap equities (heavy financial, materials and resources)
Exchange: Montreal Exchange www.m-x.ca
Symbol: SXF
Size: $200 x S&P/TSX 60 Index (approximately $136,000 CAD notional)
Open Interest: 127,723
Margin: $12,850

This index offers a barometer of Canada’s stock market, and futures are traded on the Montreal Exchange. The index is heavily weighted in financials, materials and resources, all of which have bright prospects in Canada as the global economy recovers. If you believe the outlook for commodities (or Canada) is improving, buying the S&P TSX 60 Index is a good place to take advantage of that view.

FTSE 100
Description: 100 largest equities in the U.K.
Exchange: NYSE LIFFE ww.euronext.com
Symbol: Z
Size: 10 x FTSE ₤100 Index (approximately ₤52,000 notional)
Open interest: 680,960

If you live in the U.K, this is your barometer of the stock market. Futures trade on the NYSE LIFFE exchange and have a good contract size for investors as well as open interest. It’s a very liquid and deep contract that allows you to gain international exposure, or if you’d like to trade a specific opinion on the U.K

CAC 40
Description: Large caps in France
Exchange: NYSE LIFFE www.euronext.com
Symbol: FCE
Size: €10 x CAC 40 Index (approximately €37,000 notional)
Open interest: 597,097

This represents the 40 large-cap stocks in France and has an open interest fairly similar to the FTSE.

AEX
Description: stocks in Amsterdam
Exchange: NYSE LIFFE www.euronext.com
Symbol: FTI
Size: €200 x AEX Index (approximately €64,000 notional)
Open Interest: 78,593

If you have an opinion on the Netherlands, this is the contract you’d want to consider. This is a contract that encompasses the stock market in Amsterdam.

Dow Jones Euro Stoxx 50
Description: Europe large-caps
Exchange: Eurex www.eurexchange.com
Symbol: FESX
Size €10 x Euro Stoxx 50 Index (approximately €27,000 notional)
Open interest: 2,282,492

The Dow Jones Euro Stoxx 50 is the second-most active equity product in the world right now, behind the S&P 500. It trades on the Eurex Exchange and is a broad-based index based on the 50 largest European stocks by capitalization.

Swiss Market Index
Description: Swiss large-caps
Exchange: Eurex www.eurexchange.com
Symbol: FSMI
Size: CHF10 x SMI Index (approximately CHF 65,000 notional)
Open interest: 264,589
Margin: $4,233

I think this is an interesting index to trade because you have a country smack in the middle of the Eurozone, but with an independent monetary policy. You can have a scenario where Switzerland’s central bank is changing rates, but the European Central Bank is not or vice versa. That can create some interesting strategies, and is also a good index to trade against the DJ Euro Stoxx 50 too.

German DAX
Description: German large-cap stocks
Exchange: Eurex www.eurexchange.com
Symbol: FDAX
Size: €25 x DAX Index (approximately €14,000 notional)
Open interest: 156,100
Margin: $13,855

This is a widely followed contract as Germany is essentially the anchor of the Eurozone and tends to outperform many other areas within the zone.

FTSE MIB Futures
Description: Italian large-cap stocks
Exchange: Borsa Italiana www.borsaitaliana.com
Symbol: MIB
Size: €5 x MIB Index (approximately €105,175 notional)
Open interest: 31,601
Margin: $16,000

This index is based on Italian large-cap stocks. I think this could be potentially be an interesting market to short right now, as the press has recently created a new acronym for Italy and some of the perceived weaker countries in the Eurozone: the “PIGS” (Portugal, Italy, Greece and Spain). These are the European countries in the doghouse right now because they’ve let their fiscal house to get out of order and have large debt and deficits. They could face punitive action by other members of the Eurozone for failing to follow the guidelines set up under the European Union. When you’ve got a country like Italy with a government debt level of about 115 percent of their GDP, it’s not a good situation.

Hang Seng
Description: Hong Kong large-cap stocks
Exchange: Hong Kong Exchange www.hkex.com.hk
Symbol: HIS
Size: 10 HKD x Hang Seng Index (approximately HKD 203,000 notional)
Open interest: 97,202

This index trades on the Hong Kong Exchange and is widely followed as a barometer of Asia. The Hang Seng is a great tool to access the Chinese stock market without dealing with the restrictions the Chinese government has placed on foreign capital. Many of the stocks within the Hang Seng take advantage of trends in the Chinese economy. If you are bullish China, you could just buy the Hang Seng index without the restrictions or lack of transparency you would have trying to invest in shares in China.

Nikkei 225 Index (Dollar Based)
Description: Japanese large-cap stocks
Exchange: CME Group (also Singapore Exchange and Osaka Securities Exchange)
Symbol: NKD
Open interest: 40,637

This is an interesting contract as it trades on more three different exchanges, but they aren’t fungible. You have to pick the exchange you’d like to trade it on, as you can’t buy on one and sell on another. I recommend the CME Group for North American investors. They have a U.S. dollar-based and a yen-based contract, so you can choose which currency you’d like your profits and losses determined in.

SPI 200
Description: Australian large-cap stocks.
Exchange: Australian Securities Exchange www.asx.com.au
Symbol: AP
Size: A$25 x SPI 200 Index (approximately A$112,500 notional)
Open interest: 30,237

Australia is much like Canada in that it’s a commodity-based economy and positioned to take advantage of a commodity boom. You might consider this index if you are bullish commodities in general, but I recommend you work with a broker to help you with this particular contract, as we don’t have direct electronic access at this time.

IBovespa
Description: Brazilian large-cap stocks (San Paulo Stock Exchange)
Exchange: BM & F Bovespa www.bmfbovespa.com.br
Symbol: BSI
Size: 1 Real x IBovespa Index (approximately 66,470 Real notional)
Open interest: 115,804

Brazil has the largest and most-developed economy in South America, and also has a well-developed futures market. If you’d like to invest in that region, this is a good contract to use, most appropriately for position trading. You will find a variety of commodity and financial markets that have been around a long time in Brazil.

That basically covers the globe! One thing to keep in mind when looking at these products is that most large-cap international stocks are truly international companies and may or may not be tied directly to a particular country’s economic cycle. They may have their headquarters in one country, but have operations in many others. Where the stocks trade really has more to do with the tax structure and the monetary policy in a particular country.  Feel free to contact me if you would like to explore trading any of these indexes, or have any questions about the markets.

Aaron Fennell is a Senior Market Strategist based in Lind-Waldock’s Toronto office, and is serving clients in Canada. If you would like to learn more about futures trading you can contact him at 877-840-5333, or via email at afennell@lind-waldock.com.

The data and comments provided above are for information purposes only and must not be construed as an indication or guarantee of any kind of what the future performance of the concerned markets will be. While the information in this publication cannot be guaranteed, it was obtained from sources believed to be reliable. Futures and Forex trading involves a substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. Please carefully consider your financial condition prior to making any investments. Not to be construed as solicitation.
Lind-Waldock , a division of MF Global Canada Co.

MF Global Canada Co. is a member of the Canadian Investor Protection Fund.
(c) 2010 MF Global Holdings Ltd.

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