what is an e mini 
the term e mini refers to an electronically traded futures contract that is a fraction of the size of a standard contract e minis are used to trade a variety of assets such as commodities and currencies but the most commonly traded assets using e minis are indexes the chicago mercantile exchange cme launched the first e mini futures contract in 1997 to give individual investors for whom standard contract sizes were often too expensive access to the futures market 1 like other futures contracts e minis are traded on the cme and other exchanges and allow investors to hedge their bets or speculate on the price movements of the underlying asset understanding e minisall futures are financial contracts that obligate the holder to buy or sell an asset such as a physical commodity or a financial instrument at a predetermined future date and price futures contracts detail the quality and quantity of the underlying asset and are standardized to facilitate trading on a futures exchange some futures contracts may call for physical delivery of the asset while others are settled in cash futures contracts were typically only accessible to institutional investors because of their size which was often too large for small investors the cme launched the first e mini contract in 1997 to draw in average traders who were keen on taking part in this alternative investment 1 this first e mini contract allowed traders to trade s p 500 futures its value was set at one fifth of the full sized contract 2the e mini quickly became a success and led to other similar contracts there are now e mini contracts that cover a variety of assets including the e mini s p 500 however remains the most actively traded e mini contract in the world 3just like other futures contracts traders can use a single e mini contract to hedge or speculate on broad market moves because they are traded electronically e mini futures contracts trade almost 24 hours a day between sunday and friday 4 investors are required to open an account with a brokerage firm in order to begin e mini futures trading the cme delisted the standard sized s p 500 index futures and options on which the e mini contract was based in september 2021 5 this contract was worth 250 times the value of the s p 500 index so if the index was 2 100 the contract would be worth 525 000 6e minis vs full sized futurese mini contracts aren t that much different than full sized futures contracts these smaller contracts also allow investors to hedge or speculate on price movements of the underlying asset whether it s an index commodity or currency as such investors can achieve their trading strategies with e minis including spread trading and e minis are so popular that their trading volumes eclipse those of full sized futures contracts e mini s p 500 futures contract specificationsas noted above the e mini contract was created to be one fifth of the size of the standard sized contract 2 the contract size is the value of the contract based on the price of the futures contract times a contract specific multiplier for instance the e mini s p 500 has a contract size of 50 times the value of the s p 500 if the s p 500 trades at 2 580 the value of the contract is 129 000 50 x 2 580 7 this means that a 0 25 point change in the s p 500 index has a monetary value of 12 50 the e mini s p 500 trades under the globex ticker es as noted above it is available on the cme nearly 24 7 from sunday to friday 6 p m to 5 p m et with a temporary trading halt between 5 p m and 6 p m et contracts are quarterly march june september december and are listed for nine consecutive quarters as well as three additional december contract months 8irs form 6781 stipulates that any gains from futures contracts traded on a u s exchange foreign currency contracts dealer equities options dealer securities futures contracts or non equity options contracts are taxed at a combination of the long term and short term capital gains rates 60 is treated as long term gain and 40 is treated as short term gain regardless of the length of the contract 9advantages and disadvantages of e minise minis are ideal trading instruments for active traders because they offer round the clock trading low margin rates volatility liquidity and greater affordability than standard contracts another benefit is that the fees associated with trading e minis are typically lower than those linked to the buying and selling of regular securities as with any financial instrument e minis also have their downsides for example because of their round the clock and electronic trading component the price of e minis can move very quickly another downfall to these alternative investments is their limited scope the selection of available e mini contracts can be limited and doesn t necessarily span as wide an array of assets as say an exchange traded fund etf or mutual fund low costs and affordablenearly 24 7 tradinghighly volatilelimited selection of contracts