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Micro E-mini options strategies

Have you ever wanted to trade options, but were hesitant due to the larger contract sizes or costs involved? Or needed more granularity for the execution of multi-leg options strategies?

Now you can do both. You can trade option strategies on the most recognized equity benchmarks in the world, with the more accessible Micro E-mini options contracts.

To better understand this, let’s look at a traditional E-mini-based strategy where you could buy the E-mini S&P 500 3000, 3100 call spread for 46 index points.

With a contract multiplier of $50 per index point, it would cost $2300 ‒ along with potential delivery of a regular-sized E-mini futures contract per call spread.

Perhaps the size of this trade is too large for your strategy or portfolio allocation?

With Micro E-mini S&P 500 options contracts, you can now enter that trade with a fraction of the exposure and less capital outlay.

You could still buy the 3000, 3100 call spread for 46 index points but using Micro E-mini options, with their smaller $5 multiplier, the cost of that spread would be $230 – just 1/10 of the cost.

You’re still able to express the same strategy with the same risk profile on the same underlying market, but with less capital and 1/10 of the exposure.

Similar to the call spread example, Micro E-mini options can be used with any of the traditional options strategies that traders use on the larger contracts.

This is just as true for single leg strategies, like a protective put.

For example, if you had an existing long position of seven Micro E-mini Nasdaq-100 futures contracts – and wanted to use options to protect those seven futures - you would need 70% of one E-mini Nasdaq-100 option.

Now with Micro E-mini options, precision hedging can be achieved. In this case, to have an exact protective put strategy, you can purchase exactly seven Micro E-mini Nasdaq-100 puts.

We’ve looked at two examples showing the benefits that the flexibility, precision, and right-sized cost of Micro E-mini options can provide. Whatever your trading strategy is, there’s an option for you.

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