To Experienced Index Futures Traders: What determines the price of NQ?

Discussion in 'Index Futures' started by 4DTrader, Mar 14, 2008.

  1. I know QQQQ ETF follows Q100 index. Q100 index follows the 100 individual stocks.

    What does NQ follow? Or is NQ the same as an individual stock? Hope some veteran traders can shed some light on this issue. Thanks.
     
  2. rjv27

    rjv27

    CME E-mini® NASDAQ-100® futures provide investors with an innovative tool for accessing and managing risks on stock market investments. Fully electronic and 1/5th the size of a standard CME NASDAQ-100® futures contract, it closely tracks the price movements of the NASDAQ-100 Index, a leading benchmark that follows 100 of the largest (in market-capitalization terms) U.S and international non-financial companies listed on The Nasdaq Stock Market.


    http://www.cme.com/trading/prd/equity/emini-nasdaq100.html
     
  3. So NQ price chart should be the same as QQQQ price chart?
     
  4. Surdo

    Surdo

    Similiar, not quite a mirror image, NQ has a decaying premium built in and trades around 23 hours a day.

    The tick size is substantially different, $1 monetary value on 100 QQQQ vs. $5 on a one lot of NQ.

    The answer to your question, is The Nasdaq 100 INDEX is the underlying on both vehicles.

    Are you writing a term paper or trading?
     
  5. Thanks, Surdo.
    I am learning to trade NQ. I am looking at futuresource.com's NQ chart and it's not that detailed. After I open an account with a futures broker, I will have access to detailed futures charts.
     
  6. Not sure what the problem is in understanding this, but I will give it a try. The NQ futures (not a stock or an etf, it is a futures contract) are based on the NDX cash index (just like the ES futures are based on the SPX), and you can see the components of the NDX and their effect today at this link:
    http://quotes.nasdaq.com/quote.dll?page=nasdaq100

    Because of interest and dividends there is usually a premium that you pay for the NQ over the NDX which is explained in detail at this site:
    http://www.indexarb.com/fairValueDecomposition.html

    Program traders get paid to keep the NDX cash index reasonably in line with the NQ futures contract by trading the individual stocks in the index against the futures contract.