Stock index futures contract belongs to the category of securities
A stock index can be regarded as a dividend-paying security. It is the portfolio of the underlying assets (the securities that make up the index). The dividend paid by the security is the dividend received by the holder of the portfolio.
Stock index futures are derivative securities whose value depends on the prices and changes in the portfolio that makes up the stock index.
In recent years, derivative securities play an increasingly important role in the financial field.
Many exchanges trade a lot of futures and options.
Financial institutions often trade forward contracts, swaps and other types of options with customers in the over-the-counter (OTC) markets outside exchanges.
In addition, more contingent claims are often cited as part of bond and stock issues.
We often see that the underlying variable attached to a derivative security is the price of the tradable security.
For example, a stock option is a derivative security whose value depends on the price of the stock.
However, as we will see, derivatives can depend on almost any variable, from the price of pigs to the amount of snow that falls at ski resorts.
The emergence of stock index futures is the result of both supply and demand factors.
From the perspective of demand, after World War II, the stock markets of developed market economies, represented by the United States, developed rapidly, which was reflected in the significant increase in the number and market value of listed stocks.
In 1980, the volume of stocks traded on the New York Stock Exchange (NYSE) reached $374.9 billion, 3.93 times that in 1970, and the average daily turnover was 44.9 million shares. In 1960, the volume was 19.96 times and the market value of listed stocks was $1.243 trillion, 5.185 times and 4.05 times that in 1960, respectively.
With the development of program trading, institutional investors adopt the "index portfolio", that is, the composition and proportion of the stock index are exactly the same as the portfolio, the price change is completely in line with the change of the stock index, and it is only a pure systemic risk, and the systematic risk avoidance mode of venture investment is more intense.