This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Four Categories of Futures Products

In this weekly series, I've been introducing the futures markets for traders who have some experience with stocks, ETFs, and equity options, and who are ready to broaden their horizons. Last time, we looked at how an understanding of the factors that determine futures prices can reveal why critics of commodity ETFs are often totally wrong. Commodities like natural gas and crude oil aren't the only things traded as futures, however, and this is a good point at which to review some of the other products.

We can group the products traded on futures exchanges into four primary categories: financial futures, energy futures, agricultural futures, and metals futures.

Financials: This is probably the broadest category, as it covers equity index and other equity-linked products, interest rates, and currencies. Futures and options on the big four equity indexes - the Dow Industrials, the S&P 500, the Nasdaq 100, and the Russell 2000 - are active, and if you're comfortable trading SPY shares and options and you're managing a good-sized account, consider giving E-mini S&P 500 products a look. Currency futures represent the world's largest asset class and these the products to know if you want to hedge against or speculate on macroeconomic risks. Interest rate products cover every point in the yield curve from 30-day Fed Funds out to 25+ year Treasury bonds. Finally, also under the equity index umbrella are the CBOE Futures Exchange's VIX futures, which track the expected implied volatility of S&P 500 index options.

Energy: Energy means, first, oil, and that means Brent crude and WTI crude, both of which have futures and options listed at ICE and CME/NYMEX. The U.S. exchanges have diversified in recent years into other crude products, and they have listings as well for refined products like gasoline, jet fuel, and heating oil. Natural gas has become an increasingly important part of the energy picture in the U.S., and the futures market offers the purest play on natural gas prices. Other traded energy products include coal, electricity, and petrochemicals.

Agriculture: This is really where futures got their start. Some people date futures to 12th century Europe or 16th century Japan but their beginning is much earlier, arguably in ancient Greece when a philosopher, Thales, moved to capitalize on his predictions about an upcoming olive harvest. Today, agriculture futures include corn, wheat, soybeans, hogs and cattle, coffee, cotton, cocoa, orange juice, sugar, and many more. Even though equity indexes get most of the attention in the day-to-day business press, agriculture products account for a huge percentage of global trade.

Metals: Industrial metals like iron ore, copper, and steel are important and people still love gold and silver. There are mini and even "micro" COMEX gold contracts, although if you have a theological thing going on with regard to "paper" assets, note that only the regular gold contract settles to actual metal.

This is just a brief list of some of the assets with listed futures contracts, and there are many other products that have been traded or proposed for trading on futures exchanges at different times. The CME lists futures on real estate and weather and clears over-the-counter swaps on credit, rates, and commodities. The ICE lists contracts on freight, carbon dioxide emissions, and other environmental products. Some products have been discussed but blocked by their industries: do you know the story of onion futures? How about futures on upcoming Hollywood blockbusters? Remember Intrade? What, you don't think of politics as another industry?

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.64 -0.11%
FB $118.57 0.84%
GOOG $698.21 0.75%
TSLA $241.80 0.43%
YHOO $36.53 -0.19%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports