The fundamentals of futures

Tuesday, October 21, 2025

The fundamentals of futures

How well do you really know futures?

1. You can trade equity futures around the clock, except: (Select all that apply.)

Between 4 p.m. ET and 9:30 a.m. ETBetween 5 p.m. ET and 6 p.m. ETMarket holidaysFrom Friday at 5 p.m. ET to Sunday at 6 p.m. ET

1/10

2. How are S&P 500 Index futures taxed?

40% of gains are taxed at the lower long-term capital gains rate, regardless of the holding period, while the remaining 60% are taxed at the short-term rate.50% of gains are taxed at the lower long-term capital gains rate, regardless of the holding period, while the remaining 50% are taxed at the short-term rate.60% of gains are taxed at the lower long-term capital gains rate, regardless of the holding period, while the remaining 40% are taxed at the short-term rate.All gains are taxed at the short-term capital gains rate, regardless of the holding period.

2/10

3. Futures orders on the CME Group exchange are filled based on:

Matching algorithms The size of the orderThe reputation of the brokerRandom order

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4. What is a tick size?

The cost of a futures contract The difference between the price a futures contract is currently trading at and the trader’s gain or loss since opening the positionThe minimum price fluctuation for a futures contractThe notional value of a futures contract

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5. Two truths and a lie: Select which statement is the lie.

It’s impossible to receive physical delivery of a commodity at settlement. You can trade options on futures. The letter “M” in futures contract display codes stands for June.

5/10

6. What is futures margin?

A beta-weighted calculation of how much you should hedge your portfolio with futuresThe amount of money that you must deposit and keep on hand with your broker when you open a futures positionThe difference between the amount you pay to open a contract and the final cash settlement The money you borrow as a partial down payment when buying a futures contract

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7. If you’re looking for a better price on a futures contract, what can you look for to ensure adequate liquidity? (Select all that apply.)

High open interestLow volumeNarrow bid/ask spreadWide bid/ask spread

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8. If the Micro E-mini S&P 500 futures contract (MES) is trading at 7,000, what is the notional value of the contract?

$3,500$7,000$35,000 $70,000

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9. If a trader is long a Micro E-mini S&P 500 futures contract (MES) opened at 7,000, and the S&P 500 Index is currently trading at 7,100, how much has their position gained?

$100$500$1,000$5,000

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10. Which of the following are possible ways a futures contract may end?

A trader can close out a contract prior to expiration A trader can roll their position A trader can choose to hold a contract until settlement All of the above

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