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How Nasdaq Options Contracts Help Investors Target Market Exposure

Photo by Stephen Dawson on Unsplash

While investing in the market, you probably know quite a bit about stocks, bonds and mutual funds. In fact, your portfolio likely contains all three to varying degrees. But when it comes to hedging your holdings using options and futures, the average investor may get a bit overwhelmed with the risk. Not only that, but to take full advantage of these types of investments and significantly impact your portfolio, you historically need some trading power. That fact alone can leave a lot of interested investors behind, preventing them from making the most out of their investments.

Helping Smaller Investors

To meet the demand of smaller investors who want to access indices’ liquidity and price changes, Nasdaq added the Nasdaq-100 Micro Index Options (XND), so investors large and small can benefit. That’s because these contracts are 1/100th the size of standard Nasdaq-100 contracts, which gives you more control over your portfolio’s exposure to the index as a whole.

Still, even the slightest exposure is vulnerable to volatility, and smaller investors may want to use futures as insurance to protect their portfolios from fluctuating markets. But since e-mini contracts ballooned in cost over the years, this option became largely unavailable to investors with less capital. After all, the last thing an investor wants to do is cash out positions to buy futures, or the other way around. So, how can you rebalance your portfolio without going this route?

Rebalancing and Future Growth

Nasdaq, in partnership with Chicago Mercantile Exchange’s (CME), made available Micro E-mini Nasdaq-100 Futures (CME: MES) at a fraction of the cost of the E-mini contracts released back in the 1990s. The contracts, which are 1/10th the size of the E-Mini Nasdaq-100 Futures, have an affordable price and a level of control that ensures you shouldn’t have to make as many hard decisions when balancing your holdings to account for market volatility. Instead, the small size of the contracts gives investors laser precision when it comes to rebalancing and allows you to speculate the Nasdaq-100 Index.

These contracts open more opportunities for the everyday investor to maximize portfolio holdings and stay on track to reach investment goals.

Diversify to Reach Your Goals

No matter the size of your portfolio, you should have access to every investment vehicle in the market. How else can you benefit alongside heavy hitters with seemingly endless capital? With the new Nasdaq products now available for every investor, the company gives you a way to access investment potential once unavailable for the average investor. Now you, too, have avenues at your disposal that could help you climb to new investment heights.

© 2021 Benzinga does not provide investment advice. All rights reserved.

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