index futures

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A financial futures contract on a financial index. On the FTSE 100 Index (see feature The Financial Times Share Indexes) the trading unit is £25 per index point; thus if a futures contract is purchased when the index stands at 2400, say, the buyer is covering an equivalent purchase of equities of £60,000 (£25 × 2400). If the index rises 100 points the purchaser can sell a matching futures contract at this level, making a profit of £2500 (£25 × 100). See also portfolio insurance.

Subjects: Financial Institutions and Services.

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