What Is an “Index Future” and What Is Its Underlying Asset?
An index future is a futures contract where the underlying asset is a financial index, such as the S&P 500 or, in crypto, a composite index like the CME CF Bitcoin Reference Rate. Trading an index future allows a single transaction to represent a broad basket of assets, offering diversified exposure.
They are always cash-settled.
Glossar
Index Future
Derivation ⎊ Index futures, within cryptocurrency markets, represent agreements to buy or sell an underlying crypto index at a predetermined price on a future date, functioning as forward contracts standardized for exchange trading.
Index Futures
Derivation ⎊ Index futures, within cryptocurrency markets, represent agreements to buy or sell an underlying crypto index at a predetermined price on a future date, functioning as forward contracts standardized for exchange trading.
Composite Index
Index ⎊ A composite index, within cryptocurrency derivatives, options trading, and broader financial engineering, represents a calculated value derived from a weighted aggregation of multiple underlying assets or factors.
Futures Contract
Leverage ⎊ Futures contracts in cryptocurrency represent agreements to buy or sell an underlying asset at a predetermined price on a future date, functioning as a derivative instrument that allows for amplified exposure without immediate asset ownership.
Underlying Asset
Futures Pricing incorporates the cost of carry, which in crypto markets includes funding rates derived from perpetual swap markets and the time value associated with holding the spot asset.