Multiplier

Dollar value per 1 point move. ES × 50 = $50/pt. NQ × 20 = $20/pt. GC × 100 = $100/pt.

Notional Value

Total market exposure = Price × Multiplier. 1 ES contract ≈ $275K S&P 500 exposure.

Initial Margin

Cash required to open a position. Typically 5–10% of notional - significant leverage.

Mark-to-Market

P&L settles daily. Profits/losses credited or debited from your account every session.

Long Position

Buy the contract expecting price rise. Profits when price goes up, losses when it falls.

Short Position

Sell the contract expecting price fall. Profits when price falls. Unlimited upside risk.

Contango

Futures price > spot price. Normal for commodities with storage costs (oil, gold).

Backwardation

Futures price < spot price. Occurs when immediate supply is tight or demand is high.

Roll Yield

Gain or loss from rolling an expiring contract into the next month. Negative in contango.

Basis

Difference between futures price and spot price. Converges to zero at expiry.

Delta-One

Futures move almost 1:1 with the underlying. No time decay or volatility premium.

Leverage Risk

Small price moves create large P&L swings. A 1% move on ES = ~$1,375 per contract.

Spread Trading

Long one contract, short a related one. Reduces directional risk, profits from price differential.

VWAP

Volume Weighted Average Price. Institutional benchmark for execution quality across a session.

Open Interest

Total outstanding contracts. Rising OI + rising price = strong trend. Falling OI = trend weakening.