. 10,000. 11,000. 12,000. or maybe 9,000?! Hey, everybody’s got their opinion, but where do we go from here?

Well, regardless of your belief, there’s now a strategy for you. And with the new CBOT DJIA futures and futures options contracts, speculating on the Dow has never been easier.

The Chicago Board of Trade (CBOT) and Dow Jones & Company, Inc. two universally acknowledged financial market leaders, have joined forces to offer the most significant new investment opportunity to present itself in years — trading in futures and futures options contracts on the Dow Jones Industrial Average (DJIA.)

CBOT DJIA futures and futures options allow investors to inexpensively (approx. $6,000 margin as of 1/13/00) execute trading strategies based on the Dow Jones Industrial Average. For all investors, large and small, this means you can:

Protect your portfolio against adverse changes in the stock market.

THE DOW JONES INDUSTRIAL AVERAGE

The Dow Jones Industrial Average is without a doubt the most widely followed and recognized stock index in the world. First published in 1896, the DJIA tracks the average price of 30 large capitalization New York Stock Exchange stocks — all household names that trade heavily in the United States as well as in foreign stock markets. These 30 stocks have a total market value of more than 2 trillion dollars and represent roughly one fifth of the market value of all U.S. stocks.

The DJIA is the most widely quoted stock index, as worldwide newspaper, television, radio, and electronic media reports continuously provide updates of the index. This constant flow of information makes the DJIA the easiest stock index to track in the entire world.

While the DJIA is the easiest to track, it has not been easy to trade, until now. The advent of CBOT DJIA futures and futures options contracts has changed all that. Now individual traders and investors have a myriad of new trading and risk management opportunities available to them.

CBOT DJIA

(examples for illustration purposes only)

The price of the CBOT DJIA futures contract closely tracks the level of the DJIA. For the futures (a legally binding commitment, made through a futures exchange, to buy or sell something in the future,) the value of the futures contract is equal to $10.00 times the current DJIA index level. For example, if the index is trading at 8,900, holding a futures contract (requiring $6,000 margin as of 1/13/00) is equivalent to investing $89,000.00 in the DJIA portfolio. When a CBOT DJIA futures contract is traded, the seller (also called the short ) is agreeing to sell $10.00 times the index and the buyer (or long ) is agreeing to buy $10.00 times the index on the expiration date of the contract. The minimum price fluctuation (tick size) in the CBOT DJIA futures contract is one point, or $10.00

As for the options (the right, but not the obligation, to buy or sell something at a predetermined price at any point within a specified period of time,) the purchaser of a call or a put has the right, but not the obligation, to buy or sell a CBOT DJIA futures contract at a specific price for a limited period of time. The minimum price movement (tick size) is .05 or $5.00.