The IBEX 35 is the main stock market index in Spain, prepared by the Spanish Stock Exchanges and Markets (BME) and created in 1992. It is made up of the 35 most liquid companies that are listed on the Spanish Stock Exchange Interconnection System, but what is did the IBEX 35 futures refer ? Is it the same as the IBEX 35? We anticipate that the future of the IBEX 35 and IBEX 35 are not the same, although they are closely related to each other.
IBEX 35 and IBEX 35 futures: are they the same?
The IBEX 35 is a stock market index weighted by capitalization, the most important in Spain, which is made up of the 35 most liquid companies listed on the Continuous Market of the four Spanish Stock Exchanges; these exchanges are interconnected with each other, so it is listed simultaneously in Madrid, Bilbao, Valencia and Barcelona. This index is multiplied to ten euros to find out its monterio value, so each listing point has a value of ten euros. Although market hours are from 8:00 a.m. to 8:00 p.m., the IBEX 35 auction hours are from 7:55 a.m. to 8:00 a.m., that is, five minutes.
For its part, when we talk about IBEX 35 futures we are talking about an asset totally different from the IBEX 35 index, but with which it is closely related; and it is that futures of the IBEX 35 is based on the IBEX 35. Because trading with the future of the IBEX means committing to buy or sell an IBEX index at the end of the month, with the price agreed on the day that the commitment to buy it is assumed. For example, if an IBEX 35 future is purchased at 10,000 points, a commitment is made to buy an IBEX 35 at the end of the month for those 10,000 points, regardless of the final value of the IBEX 35 at the end of the month. Regarding the expiration date, according to the agreement, it is established that it is the third Friday of each month ; it is here when all the purchase-sale transactions are carried out.
sell future
One feature of IBEX 35 futures is that you can sell this future even if you don’t count it or you are in position for it; basically because this means that the commitment to sell said security at the end of the month is acquired, not that the transaction is carried out at the time of signing the agreement. So the time you have to get hold of that IBEX is from the moment the sale is agreed and until the third Friday of the month.
It is not necessary to wait for the end of the month to acquire an asset, as we must remember that there are movements in the stock market every day; these movements cause future value expectations to change. For example, one of the IBEX 35 futures can be purchased for a number of points, while another is sold for another number of points and obtain a profit in points from both transactions. By agreement, these points have a value of ten euros. So, for example, if you make a profit of one hundred points, you actually earn 1,000 euros.
The MEFF: Spanish Financial Futures Market
The MEFF or Spanish Financial Futures Market operates as a market parallel to the stock market and with which the IBEX 35 futures work; it is the BME Derivatives Market. To achieve greater efficiency in the procedures, a settlement by differences is carried out; that is, at the end of the day all open positions are liquidated. For practical purposes, for example, if a value of 10,000 points is acquired and that same day the future closes at 10,100 and it was not possible to sell that value, in any case those hundred points are paid into the account of the holder of that value. On the contrary, if that day is closed with a value of 900 points, then the hundred points are removed from the account.
IBEX 35 futures represent not only a risky market, but also a very competitive environment. This is because in order to access it, it is necessary to have a sufficiently large capital and to be quite solvent; Taking into account that these assets are managed by points and that each point has a value of ten euros, if an asset has a value of 11,000 points, in reality you need to have 110,000 euros to be able to carry out the transaction. The advantage of this index is that it operates with a guarantee; that is, at the time of making the transaction, nothing is actually bought or sold, but rather a promise to do so in the future is assumed.
For this guarantee, the Spanish Financial Futures Market asks for an amount of at least 600 points and which is approximately 6% of the value of an IBEX future. Hence, it is considered that this index is high risk because, with 6,000 euros, a value can be moved that, in reality, can be worth 115,000 euros. And it happens that if the IBEX falls, the guarantee points also fall.
What companies are part of IBEX 35 futures?
But what assets can be bought in IBEX 35 futures ? Here we find that you can buy values from a basket of 35 shares that represent the IBEX 35. Hence, although IBEX 35 and IBEX 35 futures are not the same, they are closely linked. Within the IBEX 35 are the most liquid securities listed on the four Spanish stock exchanges. And, being a weighted value, not all the companies that comprise it have the same weight. Thus, for example, we can find within these 35 companies:
- Aena
- Almirall
- Iberdrola
- Inditex
- Melia
- Mapfre
- naturgy
- Repsol
- Telephone
- The main banks: Sabadell, Santander, BBVA, Bankiter, Caixa Bank, etc.
Mini IBEX 35 Futures
There is another series of values that emerge from the IBEX 35: These are the mini futures. They are similar to IBEX 35 futures, but with the difference that the value of the mini future is ten times less than that of the IBEX 35 Future. It is also an obligation to buy or sell the value of the shares of the companies that make up the IBEX 35, but, in this case, the price is multiplied by one euro. That is to say: one point is equal to one euro. Thus, if an index is trading at 10,000 points, the real value of that contract will be 10,000 euros; while in a futures contract with a value of ten euros, the real price of would be 100,000 euros.
Expiration for mini futures occurs on a monthly basis, on the third Friday of each month. The settlement of profits and losses is daily and is made before the start of the session on the business day following the date on which the operation is carried out. Like the IBEX 35 futures, before the next day’s session, the person will receive in his account the benefits of the future transaction, or the losses, if any, will be removed.
To operate with mini futures, MEFF asks interested parties for a guarantee worth 1,200 points or 1,200 euros for each mini future that is bought or sold. However, the value of the guarantee may vary depending on the situation in the market. The Mini IBEX auction takes place from 8:30 to 9:00 am; when the auction closes, the index enters the market, which remains open until 5:35 p.m.
