Stock index

Index futures refer to futures contracts that use indexes as the underlying assets, such as stock index futures. The Commercial Press “English-Chinese Securities Investment Dictionary” explains: index futures index futures; stock index futures. Also used as: stock index futures. name. Use plurals. A futures contract that uses stock market indexes, such as S&P Index and Hang Seng Index as the exercise product. During the transaction, both parties agreed to bear the ups and downs caused by stock price fluctuations, convert the stock index into cash units on a point-by-point basis, and multiply the transaction unit by the stock price index to calculate the standard value of the contract. The biggest feature of stock index futures is that they have both the characteristics of futures and stocks.

Stock index futures

Stock index futures refer to financial futures contracts with stock price indexes as the subject matter. In specific transactions, the value of stock index futures contracts is calculated by multiplying the number of index points by a predetermined unit amount. For example, the Standard & Poor’s Index stipulates that each point represents US$500, and the Hong Kong Hang Seng Index is HK$50 per point. Stock index contract transactions generally take March, June, September, and December as the recurring months. There are also transactions that take place every month of the year. The settlement is usually based on the closing index on the last trading day.

The essence of stock index futures trading is the process by which investors transfer their expected risks of the entire stock market price index to the futures market. The risks are offset by the buying and selling operations of investors who hold different judgments on the stock market trend. It belongs to futures trading just like stock futures trading, but the object of stock index futures trading is stock index, which is based on the change of stock index and settled by cash. There is no real stock on both sides of the transaction, and only stock index futures contracts are bought , And you can buy and sell at any time. Forex trading platforms such as magking forex are all available for futures investment.

Features of stock index futures

  • (1) Intertemporal. Stock index futures are contracts in which both parties of the transaction predict the trend of the stock index and agree to trade on certain conditions at a certain time in the future. Therefore, the trading of stock index futures is based on future expectations, and the accuracy of the expectations directly determines the profit and loss of investors.
  • (2) Leverage. Stock index futures transactions do not require the full payment of the contract value of funds, and only need to pay a certain percentage of margin to sign a larger value contract. For example, assuming that the margin for stock index futures trading is 10%, investors only need to pay 10% of the contract value to trade. In this way, investors can control contract assets 10 times the amount invested. Of course, while gains may be multiplied, the losses that investors may bear are also multiplied.
  • (3) Linkage. The price of stock index futures is closely related to the changes in the underlying asset-stock index. Stock index is the basic asset of stock index futures, which has a great influence on the changes in stock index futures prices. At the same time, stock index futures are an expectation of future prices, so they also have a certain guiding effect on stock indexes.
  • (4) High risk and diversity of risk. The leverage of stock index futures determines that it has a higher risk than the stock market. In addition, stock index futures also have specific market risks, operational risks, and cash flow risks.