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The Broker's Desk: Series 3 Prep · Lesson 7 of 14

Financial futures: interest rate, currency, stock index

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Not affiliated with or endorsed by NFA. Original practice questions, not real exam items.

Key questions

What are the three main families of financial futures?
Interest rate futures (Treasury notes and bonds, short-term rates like SOFR), currency futures (like the euro), and stock index futures (like the S&P 500 and Nasdaq-100).
How is Three-Month SOFR futures priced, and what happens to the price when rates rise?
Price = 100 minus the rate. If the rate goes up, the futures price goes down.
How are Treasury futures quoted?
In points and 32nds of a point of par. 112-16 means 112 plus 16/32, which is 112.50. Never read it as a decimal.
How do stock index futures settle?
In cash. CME lists E-mini S&P 500 and E-mini Nasdaq-100 as financially settled; there is no basket of shares to deliver.
What are the tick values for ES, NQ, MES and MNQ?
ES 0.25 point = $12.50; NQ 0.25 point = $5.00; MES 0.25 point = $1.25; MNQ 0.25 point = $0.50 (CME contract specs).

The full lesson follows below.

Financial futures: interest rate, currency, stock index

Futures are not only on crops, cattle and metals. Financial futures are contracts on interest rates, currencies and stock indexes. The rules of margin, offset and daily settlement are the same as for corn. What changes is what the contract is built on and how it is quoted and settled.

All contract details below come from CME Group contract spec pages read on 2026-10-06. Exchanges can change specs, so check the spec page before relying on a number.

1. Interest rate futures

The CFTC glossary defines interest rate futures as contracts on fixed income securities such as U.S. Treasury issues, or based on the level of a specified interest rate. Currencies are a separate category.

Treasury note futures (ZN)

The 10-Year T-Note contract (ZN) covers $100,000 face value of Treasury notes. It is deliverable: shorts who stay in deliver actual notes through the Federal Reserve wire system.

Quoting in 32nds. CME explains that Treasury futures trade in full points plus fractions of 1/32 of a point, not decimals. So:

  • 112-16 means 112 and 16/32, which is 112.50.
  • 112-08 means 112 and 8/32, which is 112.25.

The ZN minimum tick is half of 1/32 of a point, worth $15.625. A full 1/32 is therefore worth $31.25, and a full point is worth $1,000 on $100,000 face.

Made-up example: you buy one ZN at 112-08 and sell at 112-24. That is a gain of 16/32, which is half a point. Half a point on $1,000 per point = $500. Convert to 32nds or decimals first; never subtract 112.08 from 112.24 as if they were decimals.

Prices and rates move opposite. In CME’s hedging lesson, a portfolio of Treasuries that is hurt by higher rates is hedged by selling Treasury futures, and the lesson notes that lower rates bring higher prices. Rising rates, falling prices.

Three-Month SOFR futures (SR3)

SR3 is based on SOFR, a broad measure of the cost of borrowing cash overnight against Treasury collateral. Its price is an index: 100 minus the rate.

  • If the market expects a 4.00 percent rate, the price is 100 minus 4.00 = 96.00 (made-up numbers).
  • If the expected rate rises to 4.25 percent, the price falls to 95.75.

So the same rule applies: rates up, price down. Someone worried about rising rates would sell.

CME lists the contract unit as $2,500 times the IMM Index, so one basis point (0.01) is worth $25. The tick is 0.0025 ($6.25) for months with four months or less to last trade, and 0.005 ($12.50) for other months. SR3 is financially settled (cash settled).

2. Currency futures

A currency future is a futures contract on a foreign currency, priced in another currency. Take Euro FX futures (6E) at CME:

  • Contract size: 125,000 euros.
  • Quoted in U.S. dollars and cents per euro.
  • Minimum tick: 0.00005 per euro = $6.25.
  • Settlement: deliverable (physical delivery of the currency).

Made-up example: you buy one 6E at 1.10000 and it rises to 1.10500. That is 0.00500, or 100 ticks. 100 times $6.25 = $625. Check it another way: 0.005 times 125,000 euros = $625.

A long euro future gains when the euro rises against the dollar, and loses when the dollar strengthens.

3. Stock index futures

A stock index future is built on an index number, such as the S&P 500 or the Nasdaq-100, times a dollar multiplier. You cannot deliver an index, so these contracts are financially settled: the CFTC glossary describes cash settlement as the short paying the long a cash amount based on the level of an index.

These are the contracts used throughout this course. From CME’s spec pages:

Contract Code Contract unit Tick Tick value Point value
E-mini S&P 500 ES $50 x S&P 500 Index 0.25 $12.50 $50
E-mini Nasdaq-100 NQ $20 x Nasdaq-100 Index 0.25 $5.00 $20
Micro E-mini S&P 500 MES $5 x S&P 500 Index 0.25 $1.25 $5
Micro E-mini Nasdaq-100 MNQ $2 x Nasdaq-100 Index 0.25 $0.50 $2

(Point value is the contract unit multiplier; four ticks make one point.)

Made-up example: you sell one MES at 5,000.00 and buy it back at 4,990.00. That is 10 points in your favor. 10 points times $5 = $50 before costs.

Notional value is the index level times the multiplier. Made-up example: with an index level of 5,000, one ES controls 5,000 times $50 = $250,000 of index exposure, and one MES controls one tenth of that. This is why leverage cuts both ways: a small percentage move in the index is a large dollar move per contract.

Same rules, different underlying

Family Example Settlement Price moves with
Interest rate (note) ZN Deliverable Opposite to yields
Interest rate (short-term) SR3 Cash 100 minus the rate
Currency 6E Deliverable Euro versus dollar
Stock index ES, NQ, MES, MNQ Cash The index level

Key ideas

  • Financial futures cover interest rates, currencies and stock indexes.
  • Treasury futures are quoted in points and 32nds; convert before you do math.
  • For rate futures, rates up means prices down. SR3 price = 100 minus the rate.
  • 6E is 125,000 euros; tick 0.00005 = $6.25; deliverable.
  • Stock index futures are cash settled. ES $12.50, NQ $5.00, MES $1.25, MNQ $0.50 per 0.25 tick.

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