E-Mini Nasdaq 100
Futures (NQK1)
Presented by: Mason Nutt
Overview
Nasdaq futures give an investor on of the most cost-effective and efficient ways to obtain
market exposure to the Nasdaq-100 Index. The Nasdaq-100 (NQ) offers a broad-based,
modified capitalization-weighted index that tracks 100 large-cap companies that cover major
industry groups. An investor can take positions on NQ electronically, making it convenient for
the investor.
Product Groups and Sub-Groups
Product groups
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Stock Indexes
Sub-Groups
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Micro E-mini Nasdaq (MNQ), E-mini Dow (YM), Micro E-mini Dow (MYM), E-mini Russell 2000 (RTY, Nikki Yen (NIY)
and many more
E-mini’s are very common, but what are they?
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An E-mini is an electronically traded futures contract that is a fraction of the value of a corresponding standard
futures contract
Product Specifications and Rules
Tickers
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E-mini Nasdaq 100 symbol- NQK1
Volume- NQ has a high volume
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Calculated by counting the number of contracts bought or sold over a period of time
Can indicate price levels at which traders are more or less interested in the futures contract
Helps identify the times of day when a futures contract is most liquid
However, volume does not indicate if a contract is bought or sold, opened or closed
Minimum Trade Ticks
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The E-Mini Nasdaq-100 futures contract is $20 x the Nasdaq-100 index and has a minimum
trade tick of 0.25 index points, at $5 a tick
Quality of Underlying Asset
This is a high quality stock index. This index defines the quality of the market. This is where the
world looks throughout the day when trading stocks. This index specifically is focused on
technology. With the way the world is moving technologically speaking, this index will be on a
lot of people’s radars for the foreseeable future.
Delivery Terms
There is no delivery terms for Nasdaq futures, because it is in the index category. Meaning,
there is no physical form. This future is financially settled every day of every month, and every
month of each quarter. It is traded around the clock, and there is no physical form for delivery.
Settlement Rules
Normal Daily Settlement
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Equal to the settlement price of their associated Mini contracts
Lead Month
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Anchor leg for settlements and is the contract expected to be most active
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Index price + [(Days to expiration/ 365) x Interest Rate x Index Price]
Second Month
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When the lead month is the expiry month, then the second month is defined as the calendar month
immediately following the lead month. When the lead month is not the expiry month, then the second
month is defined as the first expiring non-lead month
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Index price + [(Days to expiration/ 365) x Interest Rate x Index Price]
Settlement Rules Continued
Back Months
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To derive settlements for all remaining months, the following Carry calculation will be used to derive a
settlement prices provided that this value does not violate the bid or ask
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Index price + [(Days to expiration/ 365) x Interest Rate x Index Price]
Final Settlement
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The Final Settlement Price shall be determined on the third Friday of the contract month or, if the
Nasdaq-100 Index is not scheduled to be published for that day, on the first earlier day for which the
Index is scheduled to be published
The Final Settlement Price shall be a Special Opening Quotation of the Nasdaq-100 Index to be
determined by the Nasdaq Stock Market Inc. (“Nasdaq”)
Why I chose E-Mini Nasdaq 100 Futures (NQK1)
I have been wanting to trade futures on my own for a while now, but never felt I had the
knowledge to confidently trade them. Therefore, I chose the E-Mini Nasdaq 100 for this project.
For the requirements of this presentation however, I chose NQ based on the following:
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Highly leveraged investment
Very liquid market
Commissions and execution costs are low
Opportunity for “fast money”
Great portfolio diversification
Pretty much traded around the clock