Stock index futures

Stock index futures definition

Stock index futures, short stock index futures. Stock Index Futures will be a stock index is regarded as a specific, independent of the transaction. Opened its corresponding standard futures contracts, and margin trading (or leveraged transactions) system, to buy air, short selling transactions, stock index futures usually use cash delivery.

Since February 1982 the United States Kansas City Futures Exchange to introduce Value Line Composite Index futures contracts, stock index futures market has become an important global financial investment varieties.

Stock index futures are a financial futures. Futures transaction is the sale of futures contracts by the two sides in accordance with contract requirements and the terms of agreement in the future of a particular time and place, to a specific sale price of a particular quantity and quality of the object of the transactions. The ultimate goal of the Futures Exchange is not often the subject of the transfer of ownership, but through the sale of futures contracts, to avoid the spot price risk. As the name suggests, stock index futures is the currency of the subject matter for the stock index futures contracts. Stock index futures most important function is to stock investors can use its cash to invest in hedging, to avoid systemic risk. Here investors is in contrast to the case of the speculators. Shares to investors through investment in the stock prices of listed companies with substantial growth and increased access to long-term capital gains, at the same time through the calendar year in the distribution of listed companies to earn investment income. They want to avoid stock market volatility, especially the sudden incident led to dramatic fluctuations in the loss. If there is no mechanism for short selling, once a drastic fluctuation in the stock market, many investors may be selling shares in a chain reaction, thus adding fuel to the flames, further exacerbating the price down. And stock index futures is to provide investors with a system to avoid market risk mechanism, and the principle is based on stock index and stock price movements of the same direction trend in the stock in the spot market and the stock index futures market on the contrary for the operation to offset the risk of price changes. In this way, possible fluctuations in the market when investors could not sell their shares under the circumstances to preserve and increase their investment, thus stabilizing the market and protect the interests of investors and safeguard the healthy development of the role of the securities market.

Stock index futures function

1, stock index futures investors need to purchase shares directly on the stock market investment can be reduced by the purchase of shares of the trouble and expense.
2, stock index futures and other futures trading, the margin system is implemented, investors need a lot of money can be invested in the market, the leverage ratio usually in the 10 to 40 times.
3, transaction costs are usually much smaller than stock.

The risks

Stock index futures as a financial investment products, will form a specialized in stock index futures investment groups, from the hedging of the country, the resulting risk, and highly leveraged transactions rate doubled the risk Larger, from the level of speaking, the stock index futures market risk than the risk of stock market much larger spot. Risks are: 1, high-leverage rate risk. As a stock index futures margin system so that the amount of losses may be enlarged several times. 2, market risks. Changes in the value of price or loss caused by the possibility. 3, operational risk. Because of the imperfections, internal management procedures are not sound or transaction, the business market forecast to fraud or error, the operating system, such as failure of the losses caused by reasons.

Investment strategy

Stock index futures currency is the subject of some of the stock price index contract trading unit of currency is certainly the product of the underlying index and to express to all types of contracts to the underlying index points bid. The main stock index futures trading, including trading unit, the smallest change in price, daily price fluctuation limit, the contract period, clearing, settlement method and price. Hong Kong's Hang Seng index to trade as an example, the Hong Kong dollar trading unit is 50 × Hang Seng Index, the smallest change is a price index points (50 Hong Kong dollars), that is, the Hang Seng Index decreased one point each, the buyers of futures contracts (longs ) 50 each contract on the Hong Kong dollar deficit, sellers earn 50 each for the Hong Kong dollar.

The total investment in stock index futures strategy is in the forecast when the index fell to sell stock index futures contracts, stock index forecast to rise to buy futures contracts. Use index futures to hedge divided into short and long hedging hedging. When investors hold shares, in order to avoid fluctuations in the stock market and the losses caused, and must sell a certain number of the delivery of some stock index futures contracts, if the stock market is down, investors holding shares Spot losses will be offset by the profitability of futures, which is short hedging. Prepared in the future when investors buy the shares at a certain time, in order to avoid price rise led to the loss of stock index futures contracts can be bought, long hedging.

Related Case

Where involved in the transaction are bound to encounter a problem: Only when the stock market or even the hands of the rose, before profits fell, but to watch the devaluation of stock, or Gerou out. Sell the stock, it must be the hands of the stock. Especially the "heavy" trading fund, a one-light on the charges is not a small number. How to solve this problem? How to preserve and increase the hands of the stock? Stock index futures, the value can be sold after the first buy.

In the present there is no single stock futures circumstances, can be set up screening the movement of the stock market index futures, the stock market fell, "short selling" transactions, we can preserve and increase the stock of the hands of the stock market or simply use or up to Change Stock index futures speculation.

The following are examples to illustrate son.

Opened on the assumption that card index futures, when the index reached 2,000 points, market began to fall. As a fund manager positions too heavy, not all shipments, therefore, he could corresponding number of short selling index futures contracts, after the market fell, despite the devaluation of the hands of the stock, but the hands of the short futures index is a profitable, in a certain position end of the short futures position open, its profit will be offset in whole or in part the devaluation of the stock lost. For individual investors, the same reason.
Usually, it is all stock trading, that is, "any money to buy goods at a" hot spot and futures is one of the largest leveraged transactions, that is, the small-minded. A margin ratio of 10%, then 10% of the funds can be made 100 percent of transactions. This is both a high return rate futures, are high-risk factors. For those speculators, and they do not really want to buy equities, but only to use the stock market to make the Change to post profit participation in index futures is an option. As in the previous case, when the index reached 2000 points, the stock market speculators judged to fall short when the volume of index futures contracts, and the status of certain short futures position to transfer positions. And fund managers difference is that the speculators at a profit of net profit.

China's stock index futures in Shanghai and Shenzhen now have 300 coming soon!

Shenzhen 300 index, or: Shanghai and Shenzhen 300;

Index code:

Shanghai Stock Exchange 000300

Shenzhen 399300.

Shenzhen 300 index to December 31, 2004 as its base date starting at 1,000 points.

Shenzhen 300 index by the Shanghai and Shenzhen stock markets in selected 300 A shares as samples, which are 179 Shanghai Stock Exchange, Shenzhen City 121.

Sample selection criteria for the large-scale mobility of the good stocks.

Shenzhen 300 index samples cover about 60 percent of the market in Shanghai and Shenzhen market, a good representative of the market.