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STOCK INDICES

In the United States there are three major indicators, or indexes, of market movements. These three are the Nasdaq Composite, Dow Jones Industrial Average (DJIA or "the Dow") and the Standard & Poor's 500.

A stock market index future is a cash-settled futures contract on the value of a particular stock market index. Index futures have been wildly successful with investors, and the list of actively traded contracts grows bigger every year. Futures and options on stock indexes offer users an efficient, inexpensive way to capitalize on this increasingly important and timely market segment.

 

Investors can use stock index futures contracts to hedge against stock index risk, or stock index futures can be used to speculate and, by incurring a risk, attempt to profit from rising or falling stock indexs. Whether you are a speculator or a hedger, this section on stock index futures contains a wealth of valuable information. Before trading stock index futures and options you should contact an experienced broker to discuss market risk and opportunities.