Dow Jones Industrial Average Futures and Options Contracts

Facts on the Dow Jones Industrial Average
Futures and Options Contract
Most Widely Followed Stock Index
The Dow Jones Industrial Average (DJIA) is arguably the most widely followed and recognized stock index. The index is made up of a diversified portfolio of 30 top-quality blue chip stocks. Some of the stocks that comprise the DJIA are IBM, Proctor &Gamble, Hewlett Packard, Coca-Cola, Johnson & Johnson, and other well recognized big name companies.
How to Compute the DJIA Contract Value
The cash value of the $10 DJIA futures contract is ten times the Dow Index. For example, if the Dow is at 10,000, the value of the contract is $100,000 (10,000 x $10 = $100,000). For the E-Mini $5 contract, if the Dow is at 10,000, the value of the contract is $50,000 (10,000 x $5 = $50,000). Each point move in the Dow Jones Industrial Average is equal to $10 in the $10 DJIA Futures Contract, and equal to $5 in the DJIA E-Mini Contract. For example, if the Dow moved 50 points in a day, it would be equivalent to $500 in the $10 DJIA futures contract.
Put Up 14 Times Less to Position into the Same
For a margin deposit of $5,400, an individual can participate in all the stocks in the DJIA instead of having to buy around $100,000 dollars of stocks outright. That’s around 14 times less money than buying each of the DJIA components separately.
Maximum Leverage
If you bought the stocks outright in the DJIA, the most you could leverage them on margin would be 50%. You would have to post about $50,000+ to participate in the basket of stocks in the DJIA compared to the $6,750 needed to participate in the same stocks with a futures contract. Of course, with greater leverage, the risk of greater loss and opportunity for substantial profit exists.
Multiple Uses Gives Wide Appeal
The DJIA futures contract can satisfy the needs of practically any investor. You can attempt to use the contract for outright speculative gain or to hedge all or part of your investment portfolio. There are numerous trading strategies to accomplish these goals. Consult your broker for more information.
Round-the-Clock Trading
You can trade both the $10 and E-Mini $5 DJIA futures contracts when the stock market closes, almost around the clock!
Please note: The purpose of this report was to give a better understanding of the DJIA Futures contract. Besides using the contract to capitalize on the rise or fall in the Dow, it can be extremely useful in helping hedge an existing stock portfolio. Consult your broker for more information or send your request here below.

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