Speaker A
All futures contracts have a minimum price fluctuation, also known as a tick.
Learn about minimum price fluctuations (ticks) in futures contracts, how tick sizes vary by instrument, and their impact on market liquidity.
Key Takeaways
- Tick sizes differ by futures contract and are exchange-defined.
- Tick value depends on contract size and tick increment.
- Proper tick sizing helps maintain market liquidity and tight spreads.
- Understanding tick values is essential for futures trading strategies.
Summary
- All futures contracts have a minimum price fluctuation called a tick.
- Tick sizes are set by the exchange and vary depending on the contract instrument.
- The E-mini S&P 500 futures contract tick size is one quarter of an index point.
- An index point for the E-mini S&P 500 is valued at $50, making one tick worth $12.50.
- The NYMEX WTI crude oil contract has a tick size of 1 cent with a contract size of 1,000 barrels, so one tick equals $10.
- Tick sizes vary based on the size of the financial instrument and marketplace requirements.
- Exchanges set tick sizes to optimize liquidity and maintain tight bid-ask spreads.
- Minimum price fluctuation details for any CME Group contract can be found on the product specifications page.
Chapters
- 00:00Introduction to Minimum Price Fluctuation (Tick)
- 00:05Tick Sizes Set by Exchange and Variation by Instrument
- 00:09Example: E-mini S&P 500 Tick Size
- 00:16Calculating Tick Value for E-mini S&P 500
- 00:27Example: NYMEX WTI Crude Oil Tick Size and Value
- 00:39Factors Influencing Tick Size
- 00:45Purpose of Tick Sizes in Market Liquidity and Spreads
- 00:49Finding Minimum Price Fluctuation on CME Group Website
Full Transcript — Download SRT & Markdown
Speaker A
Tick sizes are set by the exchange and vary by contract instrument.
Speaker A
For example, the tick size of an E-mini S&P 500 futures contract is equal to one quarter of an index point.
Speaker A
Since an index point is valued at $50 for the E-mini S&P 500, a movement of one tick would equal 2.52 times $50 or be equal to $12.50.
Speaker A
The tick size of the NYMEX WTI crude oil contract is equal to 1 cent, the WTI contract unit is 1,000 barrels, so the value of a one tick move is $10.
Speaker A
Tick sizes are defined by the exchange and vary depending on size of the financial instrument and requirements of the marketplace.
Speaker A
Tick sizes are set to provide optimal liquidity and tight bid-ask spreads.
Speaker A
The minimum price fluctuation for any CME Group contract can be found on the product specifications page.
Topics:minimum price fluctuationtick sizefutures contractsCME GroupE-mini S&P 500NYMEX WTI crude oilmarket liquiditybid-ask spreadfinancial instrumentstrading
