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Micro E-Mini Futures: the Essence and Perspectives of Development.

Background information

In 2019, the CME Group made a considerable shift in the configuration of the investment powers by enabling the trading of micro e-mini futures (hereinafter also referred to as MEMFs) for the most significant indices. With them, the traders who do not have considerable sums available for their operations can still go short or long markets spending no more than $25 per contract. This opportunity can be especially valuable for beginners who do not want to take excessive risks and those traders who value diversity in their portfolio, which can be significantly improved by participating in futures transactions.

As soon as they were implemented, MEMFs turned out to be highly popular among both the experienced traders and the investment newbies. Less than a month after their launch, their volume has already topped 400,000. These contracts constitute almost a quarter of the overall e-mini futures, a variety of which they represent. An additional factor that has ensured the popularity of these contracts is the convenient time of sale because transactions with them are carried out almost around the clock, from Sunday evening to Friday evening at a central time.

What are micro e-mini futures, and how they work.

In order to understand the phenomenal success of MEMFs and the prospects for their development in the coming years, it is necessary first to explain their essence. In turn, it is inextricably linked to the concept of futures in general and e-mini futures in particular.

Futures are one of the fundamental asset classes that traders and investors work with. These are the contracts that create a party’s obligation to acquire particular assets at a specific price at a predetermined moment in the future. Futures quickly became one of the key types of investment contracts.

At the same time, in the late 1990s, these assets’ value became too great for ordinary traders to deal with. In these circumstances, the need arose to create an alternative to traditional futures at a reduced cost. Such an alternative was found in the form of e-mini contracts. These contracts cost five times less than full-fledged futures. Accordingly, the ratio of assets they guaranteed was proportionally reduced.

However, time passed, and trading became an even more popular field of activity. With the emergence and development of brokerage platforms such as https://nsbroker.com/, which have made trading much more open to anyone, there is a need for even more affordable types of assets that people can buy and sell without worrying about potential losses and risks. This situation has led to the emergence of micro e-mini futures. Their cost was even lower than that of their predecessors, accounting for one-tenth of the value of conventional e-mini contracts. Thus, for instance, the micro e-minis for the minis costing $100 will only be priced at $10. This fact makes them available for even those traders who are merely starting their development in the field. 

Today, traders can acquire micro e-mini futures linked to most of the US largest stocks. They work with the majority of indices such as Russell 2000, Dow Jones, S&P 500, and Nasdaq 100. It has been announced that the e-minis will appear on the futures cycle of the US Equity Index, linked with five particular futures. Therefore, the opportunities they provide are broad and multifaceted.

Bottom line

Micro e-mini futures are popular today; however, their popularity may even increase in the future. It is a promising and convenient type of contract that makes futures exchange available even for those traders who do not have significant financial resources. Therefore, whether you are an experienced trader or a beginner, you should pay attention to this type of contract if you have not yet done so.



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