Micro E-mini S&P 500: The Next Big Little Thing In Futures Trading

CME’s Micro E-mini S&P 500 futures contract (ticker: MES) is set to hit the market in exactly 3 days providing traders with the same benefits of an E-mini futures contract, just…smaller – 1/10th the size of an E-mini contract to be exact. Hard to believe, but it’s been over 20 years since the original mini-sized futures contract was introduced in 1997 with the aptly named “E-mini S&P 500 futures contract.”

Q1 hedge fund letters, conference, scoops etc

So, what’s the need for a micro version of a mini contract now? Here’s the CME explaining:

Since the launch of the E-mini product suite in 1997, the notional value of these contracts has increased dramatically.

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. To make our more market accessible to all, CME will launch the Micro E-mini suite of futures, which feature multipliers 1/10 the size of their E-mini counterparts (i.e. $5 multiplier for Micro E-mini S&P 500 futures contract vs. $50 for E-mini S&P 500 (ES) futures).

The CME lists out some the benefits of trading the micro e-mini contracts as:

  • Liquidity
  • Capital efficiencies
  • Around the clock trading
  • Full offset with e-mini futures
    [Check out their video and webinar for more benefits]

The micro e-mini contract will particularly appeal to non-institutional traders, of which there has been an increase of by 27% since 2018.

Today, futures might be a great tool for sophisticated, self-directed traders,” says JB Mackenzie, Managing Director of Futures and Forex at TD Ameritrade. “The Micro E-mini futures can be a good match for those self-directed active traders who want more product choices within their overall portfolio.

As with any new contract, the micro E-mini contract will take some time to grow. It’s interesting to note that in 1997, when the CME launched the E-mini S&P 500 contract, the full size S&P contract had a nominal value (contract size * index value) very near to the current nominal value of the E-mini (roughly $145,000). Will we eventually see a minute-micro E-mini S&P contract when the micro E-mini nears the 150k mark – only time will tell…

In the mean time we’ve broken down the micro E-mini vs the E-mini vs the full-size S&P below:

Micro E-mini S&P 500

Article by RCM Alternatives


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