SPI futures and options and options contracts are a simple way to trade the overall share market with one trade. Trading the SPI 200 is like trading a balanced share portfolio that tracks the S&P/ASX 200 index.
The Share Price Index Futures (SPI), which tracks the S&P/ASX 200 Index, is the most popular futures contract. To buy the SPI, a trader would outlay a deposit per SPI contract, which is a small percentage of the value of the contract.
The value of the SPI 200 futures contract is $25 times the level of the index – so if the index trades at 5800, the contract would represent an equivalent share exposure of $145,00 ($25 X 5800). As a quick example, in the event that the index rises by 50 points to 5850, the contract would be worth $146,250, which would mean a $13,175 profit.
The index price of the SPI 200 contract reflects the value of the underlying physical share market plus the market’s expectation about future trends in the S&P/ASX200. Therefore when the value of the SPI 200 is higher than the prevailing level of the S&P/ASX 200 it’s an indication of a bullish outlook, and visa versa.
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