Three Basic Futures Trading Strategies

II. Trading CME E-Mini Stock Index Futures: Section 1 of 10

• "GET IN AND GET OUT."

Because E-minis can be very active, it's possible to take advantage of price movements over a very short time horizon. You can hold your position for minutes, hours, days, weeks or months. You don't have to wait until the expiration date to complete your trade - in fact, most investors don’t. To exit from or "offset" your position, you take an equal, but opposite, position (selling if you have bought, buying if you have sold).

• WAIT UNTIL THE CONTRACT EXPIRES, AND THEN MAKE OR TAKE CASH SETTLEMENT.

Cash settlement is made according to a "Special Opening Quotation," a price calculated for each product. This means your account will be debited or credited, in cash, the difference between your purchase/sale price and the final settlement as determined by the SOQ. For a detailed explanation of this process, see the CME Web site at www.cme.com. Of course if you offset your position, this process doesn’t apply.

• "ROLL" THE POSITION OVER FROM ONE CONTRACT EXPIRATION INTO THE NEXT.

If you hold a long position in an expiration month, you can simultaneously sell that expiration month and buy the next expiration month (known as a "spread") for an agreed-upon price differential. Thus you can transfer, or roll, the position forward and hold it for a longer period of time.