508 Part V: Index Options and Futures 
move in the futures contract is worth $250. There is no particular reason why a I-point 
move is worth $250, that is merely how the contract is defined. These numbers are 
subject to change. Originally, a I-point move in S&P futures was worth $500, but 
when the S&P advanced so much during the bull market of the 1990's, the point value 
was halved in order to reduce the trading exposure in trader's accounts. One could 
surmise that a further bull market advance might cause the number to be reduced 
again, or possibly a prolonged bear market could result in an increase from $250 back 
to $500, conceivably. 
Example: A futures trader buys I March S&P 500 contract at 401.00 (the smallest 
unit of trading is 0.10 points, a "dime"). The contract rises in price to 403.30. The 
trader has a profit of 2.30 points, or $575 (2.30 points x $250 per point). 
The terms of futures contracts can change as the exchanges on which they are 
traded attempt to adjust the contracts to he more competitive in the current trading 
environment. Consequently, the strategist should check with his broker to determine 
the exact terms of any contract before he begins trading it. 
OPEN OUTCRY 
Futures contracts trade on listed commodity exchanges. However, the method of 
trading is different from that used for stocks and options. Futures trade by "open 
outcry" in rings or pits. Members of the exchange are the only ones allowed to trade 
on the exchange, of course, just as is the case with stocks and options. If the. member 
is trying to execute a buy order, for example, he would announce his bid out loud 
(open outcry). Sellers would then respond by either showing him an offer or by sell­
ing to him at his bid price. This differs from stocks and options which use the spe­
cialist system, in that many people can be buying and selling at once, all over the pit. 
It also differs from the market-maker system used on some stock options exchanges 
because anyone can make the market in the commodity pit, not just a designated few 
traders. 
This form of trading can produce some oddities not normally associated with 
stock or stock option trading. There may be slightly different markets at different 
places in a large, busy trading pit. Hence a buyer on one side of the pit may be try­
ing to pay a price that is being offered on the other side of the pit, but the two do not 
trade with each other because of the size of the trading crowd. The buyer might buy 
on one side of the pit, but the seller on the other side does not sell. Then if the mar­
ket trades lower, only one of the two will have received an execution even though 
they were trying to buy and sell at the same price. Thus, one cannot be certain that 
his futures order is executed unless the market trades through his price. That is, if