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S&P 500 Mini

Source: Investopedia
This Article has been Edited for Accessibility

S&P 500 Mini

What is the 'S&P 500 Mini'

The S&P 500 mini is a derivative contract representing a designated fraction of the trading value of a standard S&P futures or options contract. Designed to expand the group of investors that could afford them, the S&P 500 Minis trade and act much like their pricier peers: the contracts are cash settled, follow the same expiration schedule and trade on the same stock exchanges.

Explaining 'S&P 500 Mini'

S&P 500 Mini futures require margin on the part of the investor, while Mini options contracts are priced at 1/10 the value of the underlying S&P 500 index ($100 factor is equivalent to standard options contracts). The Mini futures contracts are marked-to-market daily, and expiration date pricing is determined by the opening price of the underlying index securities on the day of expiration.

Market demand for a product class like this developed as the S&P index grew from the 200-300 level in 1986 (when S&P 500 derivatives were first introduced) to more than 1,000 in 2007, effectively pricing individual investors out of the market as contract sizes grew to over $100,000. With the advent of the Mini, smaller investors can use the same hedging and speculation strategies available to institutional and accredited investors, and with high levels of liquidity and exchange-backed financial integrity.

Additional Resources

  1. On The Economic Consequences Of Index-linked Investing []
  2. Economic Consequences Of Index-linked Investing []
  3. Price Discovery In The S&p 500 Index Derivatives Markets — Ut San ... []
  4. 19 Market Ecology And The Economics Of Crisis []