What Are Index Futures?The term index futures refers to futures contracts that allow traders to buy or sell a contract that is derived from a financial index today to be settled at a future date. Originally intended for institutional investors, index futures are now open to individual investors as well. Traders use these contracts to speculate on the price direction indexes, such as the S&P 500 and the Dow Jones Industrial Average (DJIA). They also use index futures to hedge their equity positions against losses.KEY TAKEAWAYSIndex futures are contracts to buy or sell a financial index at a set price today, to be settled at a date in the future.These contracts were originally meant solely for institutional investors but are now open to anyone.Portfolio managers use index futures to hedg