Protection or speculation in general price movements

Index futures can be used to speculate in both price rises and price declines in the stock market. Index futures can also be used to reduce risk in an existing stock portfolio. For example, if you believe in an existing portfolio but want protection against a general market correction, the portfolio can be retained while selling index futures. With index futures it is also possible to sell a stock portfolio that mirrors the index constituents without having to own the individual share. This is known as shorting the market.

Futures contracts are marked to market via daily settlement. Daily settlement leads to an effective use of capital and allows for realized profit and loss during the contract term. Futures also use a simplified margin calculation and settlement on T+1.