What does Index Futures mean?
Refers to a futures contract that is based on financial indices such as the S&P 500 or the Nasdaq 100 index. Index futures were introduced in 1982, and today are the 2nd most traded futures contracts in the world (behind interest rate futures). The futures price can be above or below the current spot (or cash) price of the specific index, but as the maturity gets closer and closer the futures contract eventually matches the cash price.
Futures Knowledge Explains Index Futures
Index futures are used by speculators, but more often they are purchased and sold by portfolio managers looking to hedge or leverage their position in the broader market.