Over the past few decades, the US technology sector of the stock market has risen to unprecedented heights, a remarkable testament to the spirit of American innovation. The term “Nasdaq” has become synonymous with big tech as many tech giants are traded on the Nasdaq exchange.
Aside from individual stocks traded on the Nasdaq, Nasdaq futures provide an easier, faster and more flexible way to speculate the Nasdaq-100 versus trading a basket of stocks. E-mini Nasdaq futures (NQ) and Micro E-mini Nasdaq (MNQ) futures from the Chicago Mercantile Exchange offer traders exposure to industry groups including computer hardware and software, telecommunications and biotechnology.
These convenient equity index contracts provide targeted diversification within a single asset class – the ability to speculate the top 100 American technology companies within a single instrument.
Aside from the leverage Nasdaq futures deliver, traders choose Nasdaq futures because of the lower financial commitment required, consistently liquid markets, near 24-hour trading and flexibility of trading the market in both directions.
Harness Nasdaq Performance
E-mini and Micro E-mini Nasdaq futures are derived from the Nasdaq-100 index, which tracks 100 large-cap companies spanning all major industry groups. With NQ and MNQ futures, you can take positions on Nasdaq-100 performance electronically.
Futures provide significantly more buying power with your capital than cash securities. A relatively small payment is required to control a large contract value.
- A single NQ futures contract has a notional value of $20 times the E-mini Nasdaq-100 futures price – approximately $255,480 at the time of this article – and trades in increments (ticks) of 0.25 index points, with one tick equaling $5.00.
- A single MNQ futures contract (1/10 the size of the NQ contract) a has a notional value of $2 times the Micro E-mini Nasdaq-100 futures price – approximately $25,548 at the time of this article – and trades in increments (ticks) of 0.25 index points, with one tick equaling $0.50.
Since Micro E-mini futures are fully fungible with their E-mini counterparts, traders can fine-tune an E-mini Nasdaq position as market conditions change or offset a position to reduce risk.
Gauge Big Tech Volatility (VOLQ Index)
Nasdaq has its own volatility index – VOLQ – measuring market volatility based on Nasdaq-100 index options, similar to how the Chicago Board Options Exchange (CBOE) Volatility Index (VIX) uses S&P 500 index options. Launched in October of 2020, VOLQ gauges 30-day implied volatility of the Nasdaq-100 index.
Traders can incorporate VOLQ data to confirm market reversals, identify support and resistance levels, fine-tune trade entries / exits and more.
The chart above displays daily E-mini Nasdaq futures price action in the top panel and VOLQ data in the lower panel. Generally speaking, volatility tends to increase during bearish trends.
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