Thirty years ago, there was no single product that made it cheap and easy for portfolio managers to lay off risk exposure to a basket of S&P 500 stocks. With the introduction of the S&P Futures contract at CME, traders gained a valuable tool to manage and assume more risk, responsibly. While it may be a coincidence that the great 1982 bull market run launched around the same time as the introduction of the “spoos”, it is no doubt that the contract broadened the appeal of risk-taking, enabling more players to participate.
5 years later in 1987, S&P Futures – and Chicago – cemented their roles in the world of risk management during the famous “Black Monday” crash where the S&P lost 20.4% in a single trading day. While investors couldn’t get their brokers on the phones to exit their positions and shell-shocked market makers on the floor of the NYSE put their hands in their pockets and stopped trading, the trading pit at the Chicago Mercantile Exchange never stopped moving, never stopped trading, and never stopped taking the other side of trades.
The world needed liquidity and it came to Chicago to get it.
Today, as markets increasingly become more electronic, the S&P Futures pit at CME Group still thrives and still stands tall even during the most volatile of trading periods.
This is increasingly apparent on StockTwits as well. The $ES_F stream is one of the top-five most active streams on StockTwits, having doubled in message volume year-over-year for two years running. Whether trading the product or watching it as a key indicator, our members dial into the S&P futures stream to quickly get a pulse of the index.
In a world of seemingly ever-increasing risks, the S&P Futures contract will no doubt continue to be a deep pool of liquidity to manage risks, quickly gain exposure, and cost-effectively speculate.
Thirty cheers to 30 years!
$CME is a beloved StockTwits Sponsor.
~ Sean McLaughlin: Editor & Curator, StockTwits (@chicagosean)
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