S&P 500 options and futures

Additionally, the Chicago Mercantile Exchange (CME) offers futures and options on the S&P 500 index. S&P futures can be traded on the exchange floor in an open outcry auction, or on CME's Globex platform, though only Emini contracts are traded on Globex during regular trading hours

The Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks from a broad range of industries. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a component's price change is proportional to the issue's total market value, which is the share price times the number of shares outstanding. These are summed for all 500 stocks and divided by a predetermined base value. The base value for the S&P 500 Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions, etc.

The S&P 500 index forms part of the broader S&P 1500 and S&P Global 1200 stock market indices.

A number of financial products based on the S&P 500 are available to investors. These include index funds and exchange-traded funds. However, it would be difficult for individual investors to buy the index, as this would entail buying 500 different stocks

S&P 500 Index Options Contracts & Futures Trading Contracts

S&P 500 Index: Trading Options Contracts
Investors have used options on the S&P 500 (SPX) index for a variety of purposes over the past 18 years, including investing, hedging, asset allocation, and the management of risk.

Investors appreciate many features of the SPX options, including:

• the fact that the options are tied to the world's leading benchmark for institutional investors;
• SPX options are powerful, flexible tools that allow investors to synthetically adjust their positions to a 500-stock portfolio;
• these listed options minimize counterparty risk - they are guaranteed by The Options Clearing Corporation, a triple-A rated clearinghouse.
• there is price discovery in competitive, SEC-regulated auction markets.

S&P 500 index futures trading contracts are traded through an auction-like process, with all bids and offers on each contract made public. Through this, a prevailing market price is reached for each contract, based primarily on the laws of supply and demand. This forum is a useful - and essential - element in a free market economy. You might be surprised to know that the futures markets are rarely used to actually buy or sell the physical commodity or financial instrument being traded; they're used for price estimation, risk management, and for some people, investment and profit.

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