Have you ever wanted to trade options, but were hesitant due to the larger contract sizes or costs involved? Or needed more granularity for the execution of multi-leg options strategies?
Now you can do both. You can trade option strategies on the most recognized equity benchmarks in the world, with the more accessible Micro E-mini options contracts.
To better understand this, let’s look at a traditional E-mini-based strategy where you could buy the E-mini S&P 500 3000, 3100 call spread for 46 index points.
With a contract multiplier of $50 per index point, it would cost $2300 ‒ along with potential delivery of a regular-sized E-mini futures contract per call spread.
Perhaps the size of this trade is too large for your strategy or portfolio allocation?
With Micro E-mini S&P 500 options contracts, you can now enter that trade with a fraction of the exposure and less capital outlay.
You could still buy the 3000, 3100 call spread for 46 index points but using Micro E-mini options, with their smaller $5 multiplier, the cost of that spread would be $230 – just 1/10 of the cost.
You’re still able to express the same strategy with the same risk profile on the same underlying market, but with less capital and 1/10 of the exposure.
Similar to the call spread example, Micro E-mini options can be used with any of the traditional options strategies that traders use on the larger contracts.
This is just as true for single leg strategies, like a protective put.
For example, if you had an existing long position of seven Micro E-mini Nasdaq-100 futures contracts – and wanted to use options to protect those seven futures - you would need 70% of one E-mini Nasdaq-100 option.
Now with Micro E-mini options, precision hedging can be achieved. In this case, to have an exact protective put strategy, you can purchase exactly seven Micro E-mini Nasdaq-100 puts.
We’ve looked at two examples showing the benefits that the flexibility, precision, and right-sized cost of Micro E-mini options can provide. Whatever your trading strategy is, there’s an option for you.