How Tick Sizes and Values Vary in Index Futures

ym futures tick value

Other futures contracts may be settled with physical delivery, such as agricultural goods, oil, gold, and other commodities. E-mini options on the Dow Jones Industrial Average Index are American-style options, meaning that they can be exercised at any point before expiration. Exercising the option results in the “physical” delivery of a corresponding position in the underlying cash-settled E-mini futures contract. The YM offers traders exposure to the 30 US-based blue-chip companies which compose the DJIA Index.

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Gain exposure to 30 of the largest companies in the U.S. while trading a single contract with our E-mini Dow ($5) products. Representing a portion of the standard Dow Jones Industrial Average futures, these E-mini products allow you to short the index without stock loans or variable fees. Enjoy added flexibility and efficiency with the ability to execute a basis trade relative to the official close. The risk of loss in online trading of stocks, options, futures, currencies, foreign equities, and fixed Income can be substantial.

Closing a Position

All of them include different multipliers, which will impact the potential gains or losses after each trade. For example, let’s say you short sell a Dow Jones futures contract. This contract has a DJIA value of 20,000 and a standard contract size of $10x the DJIA. Let’s say that on the final settlement date, the DJIA is trading at 20,400. Using a multiplier of 10, you owe the counterparty $4,000 (400 x$10). Futures trading involves the substantial risk of loss and is not suitable for all investors.

ym futures tick value

With this screen you may see the full market depth from the exchange and completely customize your experience. Create custom strategies or simply use the multitude that are available. You can even plot indicators and custom formulas as their own column within the ladder.

The Dow Jones index derivatives

Also, since our platform uses completely unfiltered tic data, you can be assured that you see live trades the instant they are filled. Trade the Micro E-mini’s now and have access to aggressive day trade margins. It appears that only the E-Mini and Micro E-Mini Dow Jones Futures contracts are actively traded these days, so we’ll focus on them for the rest of the article. This contract offers the highest leverage with a contract size of $25 multiplied by the closing value of the DJIA. So if the Dow Jones closes at 25,000, the contract value will be $625,000 (25,000 x 25). When two parties agree to trade a Dow Futures contract, one party bets that the underlying index’s market value (i.e., DJIA) will decrease.

ym futures tick value

Markets extremely dislike uncertainty, that is why indices started to grow when the preliminary election results became clear. The Dow Jones index futures opened above the previous day’s value area and quickly exceeded the previous trading session’s high. Moreover, the news about the successful Pfizer company vaccine test was published on Monday and the index futures prices skyrocketed. Although the size of the Micro E-mini contracts are 1/10th the size of their classic E-mini counterparts, pricing may not exactly track the pricing of the E-mini futures. Information on commodities is courtesy of the CRB Yearbook, the single most comprehensive source of commodity and futures market information available.

Exchange Traded

The minimum tick is one-quarter of an index point, or $12.50 per contract. Here’s an example of how tick sizes are a different sort of animal versus stocks. Say, you hold 100 shares of a stock trading at $10 per share, with a total position value of $1,000. In this case, an increase or decrease of $0.10 calculates out to $0.10 x 100, or a gain or loss of $10. At Schwab, you also get access to advanced trading platforms and education, where you can take advantage of market research, real-time Mini Dow futures quotes, and other specialized tools. Thus, the Dow Jones index futures includes only 30 companies (unlike the S&P 500 index, which includes 505 companies) and it is easier to analyse and predict its behaviour.

The high trading volumes and the leverage available have made Mini Dow futures and Micro E-mini Dow futures popular ways to trade the overall U.S. stock market. DJIA is calculated not as a weighted arithmetic index of the stock market. It means that the company capitalization is not taken into account but the value of all included stocks are summed up. However, instead of dividing the resulting number into the number of companies, it is divided into a special ratio, which is called ‘divisor’. They started to use it to avoid confusion due to the stock split and consolidation.

Still, Dow index futures are a popular tool for getting broad-based exposure to U.S. equity or hedging such positions. For stocks, tick sizes are fairly straightforward—basically, it’s dollars and cents times the number of shares. But for stock index futures based on the S&P 500 Index (SPX) and other benchmarks, it’s a different sort of game. E-mini Dow futures allow you to hedge your macro exposure or capitalize on anticipated movement in the DJIA Index, especially around major market-moving events.

Dow Jones Futures Facts

The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc. If you’ve ever listened to a financial market news broadcast, you’ve probably heard a reference to ‘futures trading.’ Many traders keep track of the futures market.

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U.S. stocks rallied sharply in 2017 due to (1) expectations for a tax cut, (2) strong earnings growth, and (3) the strong U.S. and global economies. Stocks rallied on Republican promises for tax cuts, sharp deregulation, and a $1 trillion infrastructure spending program over ten years. The infrastructure program never materialized and the Republican Congress during the first half of 2017 spent their time unsuccessfully trying to repeal Obamacare. However, the Republican Congress by December was successful in passing a massive tax cut bill that was heavily weighted toward corporate tax cuts. Congress slashed the top U.S. corporate tax rate to 21% from 35%. The tax cut boosted the after-tax earnings of S&P 500 companies by about 6%, which in turn gave a direct boost to stock prices.

Trading Dow Jones Futures can certainly be a useful tool for an investor. Although it’s probably best for experienced traders who fully understand market fluctuations. They can also better absorb potentially big losses if DJIA’s value doesn’t go as expected by the final settlement date.

When combined with our sophisticated trading platforms and institutional level trading infrastructure you have access to instant fills for futures trading. Try a free demo on our trading platforms with real-time quotes and charts. Simply put, the person buying the futures contract makes money if the index value increases. Whereas the party selling the futures contract makes money when the index decreases in value.

Of course trades may be executed in a single click and your position, P/L, and average entry price are displayed. On this page you may place orders for futures, options, futures spreads, option spreads and even security futures. Additionally there is a preview screen that will allow you to see the market conditions and the details of your order before it is placed. This is especially the case if you’ve practiced with a virtual account to test your trading strategy.

  • DJIA is considered to be the strongest success or failure indicator of the US stock market.
  • The high trading volumes and the leverage available have made Mini Dow futures and Micro E-mini Dow futures popular ways to trade the overall U.S. stock market.
  • A person buying the underlying futures faces losses of $5 per point, which could amount to significantly more than the fixed loss of the option premium.
  • That’s because it provides a reliable indication of the stock market’s direction at the opening bell for the day.

For example, if you opened the trade by buying five E-mini Dow contracts, you would close the trade by selling them with the same futures contract expiration date. If you opened by selling five contracts short, you would need to buy five to close the trade. A futures contract is a legally binding agreement between two parties in which they agree to buy or sell an underlying asset at a predetermined price in the future. And the value of the underlying asset—in this case, the Dow—will usually change in the meantime, creating the opportunity for profits or losses. J.B. Maverick is an active trader, commodity futures broker, and stock market analyst 17+ years of experience, in addition to 10+ years of experience as a finance writer and book editor. TD Ameritrade offers access to a broad array of futures trading tools and resources.