Stock Index Futures:

A stock index is a composition of selected securities traded on an exchange, e.g. Sensex is a composition of 30 blue- chip securities being traded on BSE. Therefore, a stock index futures contract is simply a futures contract where the underlying variable is a stock index such as BSE Sensex, S&P CNX, NIFTY etc.
The value of stock index futures in india derives its value from a stock index value. Theoretically, an investor who buys a contract of stock index futures in India agrees to buy the entire stock index and the seller agrees to sell the entire stock index. The SEBI has taken a landmark decision permitting the use of derivatives based on L.C. Gupta Committee Report. The SEBI has suggested phased introduction of derivatives starting with Stock Index Futures to be followed by Stock Index Options.
There are around 70 stock index futures contracts that get traded in the different stock exchanges around the world. Every day something amazing happens to the stock index at almost the same time and if you know the secret you can become rich by just trading stock index futures for only 15 minutes daily when the market opens.
Stock index futures are the most fascinating financial innovation in the last five decades. Today many people make a living by day trading stock index futures. However, Stock Index Futures have only been around for the last three decades. The famous S&P Futures contract was introduced in 1981.
Now S&P futures value is determined by multiplying the S&P 500 Index points by 250. Suppose that the S&P Index is at 1300 points. This means that the value of the S&P futures contract will be $325,000. If the S&P Index moves to 1350 points, you make 50 points or $12,500 and in case the value of the S&P Index declines to 1250 points, you lose 50 points or $12,500. So be careful when you trade the stock index futures.
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