Index Futures

In terms of trading, index futures are more straightforward.

When the index rises by a certain percentage, an index future buyer will gain while an index future seller will lose, exactly the same amount.

Trading in index futures is a zero sum game, and buyers and sellers gamble against each other.

Regarding capital requirement, a margin is payable upfront for an index future contract.

The investor has to pay the shortfall (margin call) to maintain the account balance at not less than the maintenance margin level.

An example:  The initial margin required for a particular Index futures contract is $688 and the maintenance margin required is $550.  Each point of the index is priced at $16.  The investor will face a margin call if the particular index drops by more than 13 points, as the investor has to pay the shortfall to maintain the account balance at not less than the maintenance margin level.