How Much Is One Micro E-mini Futures Contract?

Micro E-mini futures contracts are smaller, more accessible versions of standard E-mini futures, designed for individual traders seeking exposure to major stock market indices. These contracts allow participants to gain exposure to price fluctuations in underlying indices like the S&P 500, Nasdaq-100, Russell 2000, and Dow Jones Industrial Average. All four Micro E-mini futures are one-tenth the size of their E-mini counterparts, making them a cost-effective way to engage with equity markets. They offer benefits such as portfolio diversification, capital efficiency, and flexibility in managing risk.

Understanding Micro E-mini Futures Contract Value

The value of one Micro E-mini futures contract directly stems from its underlying index, multiplied by a specific contract multiplier. For instance, the Micro E-mini S&P 500 futures contract (MES) has a contract multiplier of $5 per index point. To determine the total notional value of one MES contract, one would multiply the current S&P 500 index level by this $5 multiplier. If the S&P 500 Index were trading at 5,000 points, the notional value of one Micro E-mini S&P 500 futures contract would be $25,000 ($5 x 5,000).

Beyond the overall notional value, understanding the “tick size” and “tick value” is important for daily trading. A tick size represents the minimum price fluctuation a contract can make. For the Micro E-mini S&P 500, the minimum tick increment is 0.25 index points. A one-tick move in the Micro E-mini S&P 500 equates to $1.25, calculated by multiplying the tick size (0.25 points) by the contract multiplier ($5 per point). Therefore, a one-point move in the index, which consists of four ticks, would be worth $5.

The contract multiplier for Micro E-mini futures varies by product. While the Micro E-mini S&P 500 and Micro E-mini Russell 2000 both have multipliers of $5, the Micro E-mini Nasdaq-100 has a $2 multiplier, and the Micro E-mini Dow Jones Industrial Average has a 50-cent multiplier. The contracts operate similarly to their larger E-mini counterparts but with scaled-down financial commitments.

Margin Requirements for Trading

Futures trading involves leverage, requiring traders to deposit only a fraction of the total contract value as “margin” to open and maintain a position. This margin acts as a performance bond or good faith deposit ensuring a trader can cover potential losses. Margin requirements are established by the exchange, such as the CME Group, and can also be influenced by the brokerage firm.

There are two primary types of margin: initial margin and maintenance margin. Initial margin is the capital required to open a new futures position. For the Micro E-mini S&P 500 futures contract, initial margin requirements range from approximately $2,162 to $2,455 per contract.

Maintenance margin is the minimum capital that must be held in a trading account to keep an open position. If an account’s equity falls below this level due to market movements, the trader receives a margin call, requiring additional funds to bring the account back to the initial margin level. Maintenance margin for the Micro E-mini S&P 500 is similar to the initial margin, around $2,162 to $2,455. Both initial and maintenance margin requirements fluctuate based on market volatility and exchange policies. Brokerage firms may also offer lower “day trading margins” for positions closed within the same trading day.

Associated Trading Costs

Beyond margin, several direct monetary costs are associated with trading Micro E-mini futures contracts. These fees accumulate per contract and typically apply per side of the trade (when opening and closing a position). Understanding these costs is important for calculating the overall profitability of trades.

Brokerage commissions are fees charged by the trading platform or broker for executing trades. These vary significantly depending on the broker and the trader’s volume. For Micro E-mini contracts, commissions range from $0.09 to $0.75 per side. Some brokers offer tiered pricing, where higher trading volumes lead to lower per-contract commission rates.

Exchange fees are levied by the futures exchange where the contract is traded, such as the CME Group. These fees contribute to the operational and regulatory costs of running the exchange. For Micro E-mini equity futures, the CME exchange fee is around $0.25 per contract per side. In some cases, the total exchange fee for a Micro E-mini S&P 500 trade might be around $0.35 per side.

Additionally, the National Futures Association (NFA) imposes a regulatory assessment fee. This NFA fee is a standard $0.02 per side for all futures contracts. These fees are separate from margin requirements and the contract’s inherent notional value. Traders might also encounter other costs, such as data fees for real-time market data or routing fees charged by third-party platforms, which can add to the total trading expense.