What are Dow Jones futures? They are basically derivative financial contracts that are traded by both companies and individuals. Let’s dig in further and take an in-depth look.
If you watched a 24-hour news channel, you would have heard about the Dow Jones Industrial Average (DJIA). The DJIA is one of the most popular stock indexes in the world.
Often referred to as the Dow, it’s sometimes confused with the company that owns it. The Dow Jones & Company which own it is one of the largest financial and business news organizations on the planet.
These are standard DJIA contracts that are worth 10 times more than the market index value. These contracts have different expiration dates and expire quarterly over the next year.
The contract with the nearest expiration date will be the one that’s heavily traded. This is because traders can roll the positions to the next contract as the expiration date draws near.
There are also what’s known as Big Dow DJIA which is valued 25 times more than the index value. Further, there are e-mini DJIA futures which are worth five times the index value.
When we talk about futures market trade contracts, we’re talking about futures contracts for the delivery of a wide range of financial products and commodities that can be delivered at a later date.
These contracts can be traded against many major stock market indexes like the following:
The trader in the futures market is basically taking a position on an equities futures contract making a bet on the index movement.
The futures markets are open almost all day long, except for 30 minutes. They run from Sunday evening through Friday afternoon and stay open for 23 ½ hours.
This is significantly different from regular stock markets as they’re only open five days a week for 7 ½ hours.
Trading of Dow futures can only be conducted through a commodity futures broker. This is done by providing the broker with the required margin deposit for each contract that is traded.
The required margin amount is set by the commodity exchange and can differ from contract to contract.
Dow Jones futures and related options are very similar to other forms of futures trading. You are just speculating on the movement of the market.