Dow Futures Real-Time / Live Chart
Dow 30 Futures Quotes
Dow Jones Futures – Premarket Stock Trading
A futures contract is a legally binding agreement between two parties (which can be individuals or institutions) in which they agree to exchange money or assets based upon a relationship to a predetermined price of an underlying index.
What Are Dow Futures?
A Dow Future is a contract based on the widely followed Dow Jones Industrial Average. The DJIA made up of 30 stocks. The price of one Dow Future contract is 10 times the price of the DJIA. For example, if the DJIA is trading at 25,000, the price of one Dow Future is $2,50,000. When the DJIA rises by one point, the price of a Dow Future will increase by $10. A futures buyer makes money when the DJIA rises. The seller makes money if the DJIA drops. Let’s say the DJIA rises from 25,000 to 25,100. The futures buyer receives a deposit in his brokerage account of $1000 from the seller. If instead of rising, the DJIA fell from 25,000 to 24,910, the futures buyer would settle the transaction by paying the futures seller $900.
The Dow Futures begin trading on the Chicago Board of Trade at 7:20 a.m. Central Time (8:20 a.m. Eastern Time), which is an hour and ten minutes before the stock market opens, allowing trading to take place so reporters and professionals can get an idea of the market sentiment. If the Dow Futures are trading lower, chances are the stock market will open lower. The opposite is true if the Dow Futures trade higher before the market opens. Traders use this information to take positions in not just the futures marketplace, but also on individual securities.