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[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”]Trading a futures index like ES bears a lot of similarities to trading indices like SPX or XSP. But there are significant differences as well. Before you start trading futures contracts or their options, it would be wise to study them in a systematic way. Your broker may offer learning resources, and you can take courses elsewhere. The CME Group, a major marketplace for derivatives trading offers introductory and advanced courses in futures trading. Take a look at them before you jump into trading.
Option contracts on ES futures expire daily, Monday through Friday. You can buy and sell them overnight. They are highly liquid and tend to have lower margin requirements. You’ll have to apply to your brokerage to secure permission for trading futures and your broker may require your account to have a minimum balance. TD Ameritrade, for example, requires a balance of $25,000 for any account that has futures trading enabled.
ES options, like index options, are cash settled and cannot be exercised early. Because ES options trade 23/5, they may be attractive to traders who are unable to trade during the hours that the NYSE is active. They can also benefit traders who like to set up orders for overnight trading, or who wish to respond to reports that appear outside of normal trading hours, such as earnings reports and late-breaking news.
Key Take-away: Investors who fully understand futures have increased opportunities for profiting from trading.
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