Nasdaq Futures: speculate on Big Tech at a low price

In recent decades, the US technology sector of the stock market has reached unprecedented heights, a remarkable testament to America’s spirit of innovation. The term “Nasdaq” has become synonymous with big tech, as many tech giants trade on the Nasdaq stock exchange.

In addition to individual stocks traded on the Nasdaq, futures contracts Stocks offer an easier, faster and more flexible way to speculate on the Nasdaq-100 compared to trading a basket of stocks. Chicago Mercantile Exchange e-Mini Nasdaq (NQ) and Micro e-Mini Nasdaq (MNQ) futures contracts offer traders exposure to industry groups such as computer hardware and software, telecommunications and biotechnology.

These convenient equity index contracts offer targeted diversification within a single asset class – the ability to speculate on the top 100 US technology companies within a single instrument.

Besides the leverage that Nasdaq futures offer, traders choose Nasdaq futures because of the lower financial commitment required, always liquid markets, almost 24 hours of trading and the flexibility to trade the market both ways.

Nasdaq Harness Performance

E-mini and Micro E-mini Nasdaq futures contracts are derived from the Nasdaq-100 Index, which tracks 100 large-cap companies covering all major industry groups. With NQ and MNQ futures, you can take positions on the Nasdaq-100 return electronically.

Futures contracts offer much more purchasing power with your capital than cash securities. A relatively small payment is needed to control a large contract value.

  • A single NQ futures contract has a notional value of $20 times the price of 100 e-Mini Nasdaq futures contracts – approximately $255,480 at the time of this article – and trades in ticks of 0.25 index points, with a tick equal to $5. 00.
  • A single MNQ futures contract (1/10 the size of the NQ contract) 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 is trading in increments (ticks) of 0.25 index points, one tick equaling $0.50.

Since Micro E-mini futures contracts are fully realizable with their E-mini counterparts, traders can adjust a Nasdaq E-mini position when market conditions change or offset a position to reduce risk.

Measuring Big Tech Volatility (VOLQ Index)

The Nasdaq has its own volatility index – VOLQ – which measures market volatility based on options on the Nasdaq 100 index, similar to how the Chicago Board Options Exchange (CBOE) Volatility Index (VIX) uses S&P options 500 of the index. Released in October 2022, the 30-day VOLQ implied volatility indicators for the Nasdaq-100 index.

Traders can incorporate VOLQ data to confirm market breakouts, identify support and resistance levels, adjust trade entries/exits, and more.

The chart above shows the daily price action of E-mini Nasdaq futures in the upper panel and VOLQ data in the lower panel. Generally speaking, volatility tends to increase during uptrends.

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