Nasdaq Futures: Speculate Big Tech for a Small Price

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NinjaTrader Blog

In the past few decades, the US technology sector has reached unprecedented heights in the stock market, remarkable evidence of the spirit of American innovation. The term “Nasdaq” has become synonymous with big tech as many tech giants are traded on the Nasdaq stock exchange.

Aside from individual stocks traded on the Nasdaq, Nasdaq futures offer an easier, faster, and more flexible way to speculate on the Nasdaq-100 than trading a basket of stocks. E-Mini-Nasdaq Futures (NQ) and Micro-E-Mini-Nasdaq Futures (MNQ) on the Chicago Mercantile Exchange offer traders exposure to industry groups such as computer hardware and software, telecommunications, and biotechnology.

These convenient stock index contracts provide targeted diversification within a single asset class – the ability to speculate the 100 largest American technology companies within a single instrument.

Aside from the leverage that Nasdaq futures offer, traders choose Nasdaq futures because of its lower financial exposure, consistently liquid markets, near-24-hour trading, and the flexibility to trade the market either way.

Harness the power of Nasdaq

E-Mini and Micro E-Mini Nasdaq Futures are derived from the Nasdaq 100 index, which tracks 100 large-cap companies from all major industry groups. NQ and MNQ futures allow you to electronically take positions on the performance of the Nasdaq-100.

With their capital, futures offer significantly more purchasing power than cash. A relatively small payment is required to control a large order value.

  • A single NQ futures contract has a face value of $ 20 versus the E-mini Nasdaq 100 futures price – approximately $ 255,480 at the time of this article – and trades in ticks of 0.25 index points, with a Tick ​​equals $ 5.00.
  • A single MNQ futures contract (1/10 the size of the NQ contract) a has a face value of $ 2 of the Micro E-mini Nasdaq 100 futures price – approximately $ 25,548 at the time of this article – and is made in increments (Ticks) traded) of 0.25 index points, with one tick equivalent to USD 0.50.

Because Micro E-Mini Futures are fully fungible with their E-Mini counterparts, traders can optimize an E-Mini Nasdaq position when market conditions change or offsetting a position to reduce risk.

Measure Big Tech Volatility (VOLQ Index)

Nasdaq has its own volatility index – VOLQ – which measures market volatility based on Nasdaq 100 index options, similar to the way the Chicago Board Options Exchange (CBOE) volatility index (VIX) uses S&P 500 index options. VOLQ was launched in October 2020 and measures the 30-day implied volatility of the Nasdaq 100 index.

Traders can use VOLQ data to confirm market reversals, identify support and resistance levels, optimize trade entries / exits, and much more.

The above graph shows the daily price movement of the E-mini Nasdaq futures in the upper area and the VOLQ data in the lower area. In general, the volatility tends to increase with declining trends.

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