Micro E-mini Futures, Explained


By: Spencer Israel

It’s been six months since the CME launched Micro E-mini futures, its latest suite of futures products, and the initial data is good.

More than 1 million Micro E-mini futures contracts changed hands in their first three days of trading in May. In its earnings report on Oct. 30, CME Chairman and CEO Terrence A. Duffy said Micro E-minis had an average daily volume of about 565,000 in the third quarter (up 35% from Q2), and more than 50,000 accounts are actively trading the products.

What Are Micro E-mini Futures?

Micro E-minis are the CME’s latest attempt at making futures trading more affordable for the average trader/investor. But first, a quick history lesson.

Stock index futures have historically been a popular trading tool used by institutional investors to do everything from hedge to add leverage. But by the late 90’s, stock index futures contracts had become too expensive for the average retail investor to trade.

So in 1997 the CME launched E-mini futures, smaller contracts worth ⅕ the size of a conventional index futures contract. These products became immensely popular. In 2018, the company reported average daily volume for E-mini S&P 500 futures contracts was 2.7 million.

But as the value of stock market indices has risen in the ensuing 22 years, so too did the value of E-mini futures contracts. As the CME put it, “The notional value of the E-mini S&P 500 futures contract has increased from ~$47K on the date that it launched to~$145K on April 22, 2019. The amount of capital needed to access the futures market has become too burdensome for many individual traders.”


Source: CME Group

That brings us to May, and the launch of Micro E-minis. Micro E-minis are futures contracts that are 1/10 the size of an E-mini futures contract.

Right now, there are Micro E-minis offered for four stock indexes:

  • S&P 500 (MES)
  • Nasdaq 100 (MNQ)
  • Russell 2000 (M2K)
  • Dow Jones Industrial Average (MYM)

More Affordable Stock Index Futures

When it comes to contract specs, Micro E-minis trade similarly to their standard E-mini counterparts, with identical trading hours from Sunday at 6 p.m. to Friday at 5 p.m. ET. and identical contract expirations on the third Friday of the last month of the quarter (March, June, September and December).

The biggest difference is contract size. Because Micro E-minis are 1/10th the size of standard E-minis, their margin requirement is also 1/10th the size. And due to this smaller contract size, moves up and down are worth less in Micro E-minis.

In a standard E-mini S&P 500 contract, for example, the value of one tick is worth $12.50, while the value of a one point move in the S&P 500 is worth $50 per contract. In a Micro E-mini contract, the value of one tick is worth $1.25, and a one point move in the S&P 500 is worth $5 per contract.

As with any futures product, the risk factors remain the same. But the hope is that these cheaper products will entice more everyday investors to the futures side of the market. And with a half-years’ worth of data, it appears to be working.

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Futures trading involves the substantial risk of loss and is not suitable for all investors. Each investor must consider whether this is a suitable investment since you may lose all of or more than your initial investment. Past performance is not indicative of future results.

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