FTSE futures explained
Rebecca Cattlin July 19, 2021 7:35 AM
FTSE futures are a popular way of speculating on the collective price of a group of stocks – usually the FTSE 100. Discover everything you need to know about FTSE futures, including how to trade FTSE 100 futures and when FTSE futures trading hours are.
What are FTSE futures?
FTSE futures are contracts in which two parties agree a set price and date on which to exchange the value of a FTSE index – usually the FTSE 100. Unlike other futures contracts, FTSE futures aren’t based on an underlying asset, but rather a number that represents the collective value of a group of stocks.
Discover how to trade futures
FTSE futures are used by brokers, specialist traders and market makers to manage risk on the UK equity market by locking in a price ahead of time, minimising the impact of market fluctuations.
FTSE futures are also thought to help predict an index’s market movements in the near-term. As they’re traded nearly 24 hours a day, index futures can be an indication of how the stock market might move at the start of the next session.
Learn more about indices trading
What are FTSE futures trading hours?
FTSE futures trade between 8am to 9pm (UTC). However, outside of these hours, FTSE futures contracts are priced based on estimates from movements in Dow futures and other global stock indices. This means FTSE futures can be traded nearly 24-hours a day.
FTSE 100 futures
FTSE 100 futures contracts are based on a capitalisation-weighted index of the 100 largest companies listed on the London Stock Exchange. Top constituents include AstraZeneca, Unilever, HSBC and Diageo.
Learn more about the FTSE 100 and how to trade it
FTSE 100 futures are cash settled upon expiration, as there is no physical asset to exchange. FTSE 100 futures have expiries in a quarterly cycle – March, June, September and December.
Let’s say you thought the price of the FTSE 100 was going to rise from its current price of 7000. You buy a FTSE futures contract, which is valued at £10 per index point. So, your contract value would be £70,000. As futures are leveraged, you wouldn’t need this full amount, but rather a deposit – known as margin – to open the position.
If the price of the FTSE 100 did increase, up to 7500, the contract would now be worth £75,000 and you would’ve made £5,000 profit. But if the index fell to 6500, you’d have lost £5,000.
When you trade the FTSE 100 futures via derivatives, you’d simply ‘buy’ if you thought the price would rise, and ‘sell’ if you thought it would fall. Your profit or loss would depend on how much the market moved in your favour.
FTSE 250 futures
FTSE 250 futures are based on the capitalisation-weighted index of the 250 largest companies on the LSE, after the top 100 listed on the FTSE 100. The shares listed on the FTSE 250 are classed as mid-cap stocks. Top constituents include Morrison Supermarkets, Electrocomponents, Pennon Group and Howden Joinery Group.
FTSE 250 futures contracts expire in the same quarterly cycle of March, June, September and December. Unlike FTSE 100 futures, the contract value is only set at £2 per point. So, if the FTSE 250 was trading at 22,000, the FTSE 250’s contract value would be worth £44,000.
FTSE MIB futures
FTSE MIB futures are based on the underlying FTSE MIB index, which consists of the 40 largest and most liquid companies on the Italian national stock exchange – the Borsa Italiana. It’s also known as the MIB 40 or Italy 40.
FTSE MIB index futures are traded from 8:00 am to 10 pm Central European Time (CET). As with other FTSE futures, MIB futures are cash settled as there is no underlying asset to exchange.
FTSE MIB futures are priced using a multiplier of €5 per index point. So, if the FTSE MIB was trading at 25,000, a futures contract on the index would be worth €100,000.
Do FTSE futures pay dividends?
FTSE futures don’t pay dividends, as you never really take ownership of the shares of companies on the stock index in question.
How to start trading index futures
You can start trading index futures – such as FTSE futures – with us in just a few easy steps:
- Open a City Index account, or log in if you’re already a customer
- Search for the index you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
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