How Much You Need to Trade the E-mini Nasdaq-100

What is the Nasdaq-100

The Nasdaq-100 is an index of the 100 largest non-financial companies listed on the Nasdaq stock exchange based on market capitalization. It began on January 31, 1985 at a base value of 125 and mainly serves as a benchmark for US technology stocks, although it also includes companies in other sectors.

Even though the Nasdaq-100 itself is an index, you can trade it with futures contracts such as the E-mini Nasdaq-100 (NQ) or its smaller brother Micro E-mini Nasdaq-100 (MNQ).

As soon as you get the hang of stock market whipsaws, you will want to hedge against downturns. The NQ and MNQ were made precisely for efficient portfolio hedging. Brokerages charge low trading fees and you can hedge with low margin requirements. Use our short signals to know when to hedge your portfolio.

E-mini Nasdaq-100 Margin Requirements

According to official specifications, margin requirements are

• $16,000 for the E-mini Nasdaq-100 (NQ), and
• $1,600 for the Micro E-mini Nasdaq-100 (MNQ).

Example: The Nasdaq-100 index is currently at 13,144 and because the futures contract has a multiplier of $20, one contract’s value equals $262,880. This means that you can hedge a quarter of a million-dollar portfolio efficiently by shorting just one contract of the E-mini Nasdaq-100 with a $16,000 margin.

You need $16,000 to trade one contract. You don’t have to put up another $262,880 to hedge as you would need with an ETF.

Overnight maintenance margins are generally a little higher. Margin requirements at Interactive Brokers, for example, are currently $22,863.47 per NQ contract and $2,286.35 per MNQ contract. To hold positions overnight, you need to meet overnight maintenance margin requirements.

Tech investors typically use futures contracts to hedge against downtrends and remove the hedge when the fog clears. If your portfolio is heavily exposed to the dynamic technology sector, the NQ and MNQ are ideal instruments for hedging downtrends.