Derivatives · Intermediate · 4 min

Micro futures

You can explain how micro futures differ from standard contracts, calculate what a point is worth, and explain why smaller size does not mean less risk per contract.

One tenth the size

For a long time, futures were a market for professionals. One E-mini S&P 500 contract, already a "mini" version of an older, larger contract, controls around a quarter of a million dollars of exposure. A normal daily move can mean thousands of dollars of gain or loss.

Micro futures were created to make the same markets accessible with smaller amounts. This lesson explains what they are, how to calculate their value, and the one thing they do not change.

$50 vs. $5 per point

CME Group launched micro futures on major US stock indices on 6 May 2019. They follow the same indices as the E-mini contracts, at one tenth of the size.

For the S&P 500, according to CME:

E-mini S&P 500: 50 dollars per index point.
Micro E-mini S&P 500: 5 dollars per index point. The smallest price step is 0.25 points, worth 1.25 dollars.

CME explained the launch with the growing size of the E-mini contract, whose notional value had risen to around 145,000 dollars at the time. Since then, the micro contracts have become very widely traded. Micro versions also exist for other markets, for example some commodities and currencies.

What micro futures change:

Position sizing. A smaller unit lets traders match risk to their account more precisely.
Margin. Margin requirements are smaller in line with the contract size.

What they do not change:

Leverage. Each contract is still leveraged. A Micro E-mini at an index level of 5,000 represents about 25,000 dollars of exposure.
Mechanics. Daily settlement, margin calls and losses beyond the margin all apply, as the last lessons explained.

10 micros = 1 E-mini

A fictional trader with an account of 10,000 dollars considers the S&P 500. The index stands at 5,000 and then falls 60 points.

One E-mini: loss of 60 × 50 = 3,000 dollars, 30% of the account.
One Micro E-mini: loss of 60 × 5 = 300 dollars, 3% of the account.
Ten Micro E-minis: loss of 3,000 dollars again.

Micros made a reasonable position size possible. Whether the trader used that possibility depended on how many contracts they bought.

Common mistakes

Buying many micros instead of one big contract. The exposure is the same.
Thinking micro means low risk. Each contract is still leveraged.
Ignoring tick value. Small steps still add up quickly.
Forgetting daily settlement. Losses are taken from the account every day.

The takeaway

Micro futures are one-tenth the size of their E-mini cousins. They let smaller accounts trade futures, but each point still costs real money.

Check yourself

Quick quiz

4 questions. Instant feedback, nothing is saved.

1Tap the contract where a 20-point move is worth 100 dollars.

Tap the chart.

20 points × 5 dollars = 100 dollars on the Micro E-mini. On the E-mini, it would be 1,000.
2When did CME launch Micro E-mini equity index futures?

CME launched them on 6 May 2019, at one-tenth the size of the E-mini contracts.
3What is the minimum price step of the Micro E-mini S&P 500, and its value?

CME sets the tick at 0.25 points. At 5 dollars per point, that is 1.25 dollars.
4A trader opens ten Micro E-minis instead of one E-mini. Is the risk smaller?

Smaller contracts help only if you trade fewer of them. Ten micros have the same notional value as one E-mini.

of 4 correct.