Stock index futures are futures contracts based on stock price indices, where both parties agree to buy or sell according to a predetermined stock price index at a specific future date. Upon expiration, the price difference is settled in cash. As a type of futures trading, stock index futures share the same basic characteristics and procedures as ordinary commodity futures trading. Stock index futures are essentially a type of futures, which can generally be divided into two categories: commodity futures and financial futures.

Stock index futures trading methods:

Historically, futures trading was conducted through traders shouting bids in trading halls. Nowadays, most trading is done electronically. The operation is quite simple: during trading, investors input buy or sell orders through the company's computer system, and the exchange's system executes the final transaction.

Stock index futures trading costs:

When buying or selling stock index futures contracts, both parties are required to deposit a sum of money with the clearing house as performance bond, known as margin. The first purchase of a contract creates a position, while the first sale of a contract establishes a short position, also known as opening a position. Positions must be settled daily. After opening a position, it is held until maturity. During the contract period, a reverse transaction can be made to offset the original position, which is called closing a position. For example, if 10 contracts are sold on the first day and 10 contracts are bought back on the second day, the first transaction opens a short futures position.

Closing a position involves buying or selling futures contracts of the same type, quantity, and delivery month as the held contracts, but in the opposite trading direction. Understanding futures trading behavior, the entire process of such trading is called holding a position. After establishing a position, there are no closed contracts. Traders can choose two ways to terminate a futures contract: either by closing the position or by holding it until the final transaction and conducting physical delivery. Opening a position is also called establishing a position. In trading, there are generally two methods: one is to assess the market trend and act as the buyer.