Summary — Animal Spirits Podcast: "Talk Your Book: How to Invest in Futures"
Date: August 18, 2025
Hosts: Michael Batnick, Ben Carlson
Guest: Craig Buick, Head of Retail Education, CME Group
Episode Overview
This episode delves deep into the rising popularity of retail futures trading, the mechanics of futures contracts, and how the CME Group is serving both new and experienced traders. Michael Batnick and Ben Carlson are joined by Craig Buick from CME Group, who brings insight into recent trends, education efforts, and the practicalities and risks involved in futures. The conversation covers leverage, comparison to options, settlement, and the explosive growth of retail participation—making it essential listening for anyone curious about how and why individual investors are diving into futures markets.
Key Discussion Points & Insights
1. The Surge in Retail Futures Trading
Timestamps: 00:44–03:53
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Retail Participation as a Growth Story:
Michael reveals he's a CME shareholder, citing retail participation as a "massive tailwind" and "super duper growth story." He believes the increased interest in futures will outlive bull or bear markets given their utility for both leverage and hedging. -
Retail Data:
- CME reported over 90,000 new retail traders (a 56% YoY increase) trading futures in Q2, marking five consecutive quarters of double-digit growth. (03:06)
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Accessibility:
- Major broker-dealers offering futures alongside stocks have driven this uptick.
- Craig On Accessibility:
"We've had some high-profile broker dealers begin to offer futures, which just increases the accessibility." (03:53)
2. Core Advantages of Futures for Retail
Timestamps: 03:53–06:38
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Leverage/Capital Efficiency:
- Less capital required to gain large market exposure compared to equities.
- Quote [Craig]:
"To hold a relatively large position, the amount of money that an individual has to put up, it's much less than what you typically would in, for example, the securities markets." (03:53)
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24-Hour Trading:
- Most futures markets are open almost continuously from Sunday evening to Friday.
- Quote [Craig]:
"Most of our futures markets open at 5pm on Sunday, Chicago time, and they're essentially open 23 hours a day until 4pm on Friday. So I think traders really like that ability..." (05:00)
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Ease of Shorting & No PDT Rules:
- Shorting is simpler in futures vs. equities; pattern day trading rules do not apply.
3. Pandemic Effects and Product Innovations
Timestamps: 06:38–08:16
- Not Just a Bubble:
- Individual futures trading isn’t new, but accessibility and pandemic-era interest accelerated growth.
- Retail-Specific Products:
- Launch of micro equity index futures in 2019 opened doors for smaller investors.
4. Futures Contracts Explained
Timestamps: 08:45–10:00
- Definition:
Quote [Craig]:"A futures contract is simply a contract to buy or sell something...at some point in the future. But...if you buy a share of Apple, you own...part of the company. With futures, it does not convey ownership." (08:52)
5. Leverage & Margin Nuances
Timestamps: 10:00–11:50
- Margin in Futures vs. Equities:
- In equities, margin is a loan from a broker. In futures, it’s a performance bond/good faith deposit.
- Initial margin can be as low as 4–6% of position notional value.
- Michael’s reaction:
"Oh my." (11:20)
6. Futures vs. Options
Timestamps: 11:50–14:02
- Straight Exposure vs. Conditional Payoff:
- Futures offer direct long/short exposure (delta 1) like owning the underlying.
- Options have non-linear payout, decay, and can expire worthless.
- Memorable Quip:
"Can I petition the board to change the ticker from CME to F U N?" (Craig, 13:46) "You can petition the board. I don't know how far you'll get with that." (Michael, 13:53)
7. Settlement, Expiration, and Delivery
Timestamps: 14:02–18:09
- Expirations and Delivery:
- Most traders close/roll before expiration; only a minute fraction result in physical delivery.
- Equities index futures are cash-settled.
- Mark-to-Market:
- Gains/losses calculated and cash credited or debited daily.
- Quote [Craig]:
"Every single day you have to, you have to true up every single day." (16:19)
8. Risk Controls & Trading Mechanics
Timestamps: 18:09–19:54
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Collateral and Margin Calls:
- Trades clear through Futures Commission Merchants (FCMs), which enforce margin requirements.
- Maintenance margin and margin calls ensure traders don’t default.
-
Costs:
- Traders pay CME fees plus broker commissions, which can vary with volume.
9. Open Interest & Shorting
Timestamps: 20:35–21:50
- Open Interest Mechanism:
- Each new buy/sell creates a contract—no "finite inventory" as with stocks.
- Shorting a future is as simple as selling a contract.
10. Common Uses: Hedging, Speculation, Active Trading
Timestamps: 21:50–24:38
- Traditional & Contemporary Use:
- Originally designed for hedging (e.g., farmers), futures are now frequently used for active trading and swing trading by retail.
- Classic Commercial:
- Nostalgic reference to an Interactive Brokers ad that highlighted after-hours global trading for hedging.
- Michael on Use Case:
"There’s a lot of individual traders who are long...can use micro or E-mini NASDAQ 100 to hedge...Or maybe they call it trading around a position..." (24:38)
11. Futures in Crypto
Timestamps: 25:23–29:15
- Crypto Futures Growth:
- Crypto futures, esp. micro contracts, have seen rapid uptake among retail due to more manageable contract sizes.
- Standard BTC future = 5 BTC (large notional size); micro BTC = 1/10 BTC.
- Craig:
"The micro Bitcoin is 1/10 of 1 bitcoin...much more manageable for the retail trader." (27:07)
- Crypto Impact:
- Crypto is one of CME's fastest-growing retail segments, especially post-2024 election.
12. Retail Education at CME
Timestamps: 29:15–34:12
- Importance of Education:
- CME invests heavily in educational resources to ensure traders understand leverage, risk, margin, and settlement.
- Craig:
"Our job is to make sure that traders understand how the products work, the risks involved, obviously..." (29:20)
- Trader Sophistication:
- Most futures traders are relatively sophisticated compared to some ETF/leveraged product users.
- Michael:
"People that are trading futures tend to learn how they work...know what they're doing." (31:26)
13. Key Takeaways & Resources
Timestamps: 32:47–34:12
- Why Futures?
- Capital efficiency, nearly 24-hour access, relaxed regulatory constraints (vs. stocks), and direct market exposure.
- For more info and education, Craig recommends:
"We have a...world class educational portal called CME Group Institute. If you go to cmegroup.com/education it'll take you right there." (33:37)
Notable Quotes
-
Craig Buick on Leverage & Risk:
"That is a double edged sword. It's a leveraged product which can accelerate gains and losses." (29:20)
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On Retail Futures Boom:
"Futures trading by individuals isn't brand new...But what's really led to some of the large increases that we have is the increased accessibility of futures." (06:38)
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Michael Batnick on Futures Traders:
"I kind of feel like...there has to be a step that you take to be a futures trader...These are people who sort of kind of know what they're doing." (31:20)
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Craig on Product Purity:
"What's more correlated to crude than crude. So when you're trading futures, you are literally trading that particular asset." (31:26)
Important Segment Timestamps
- Retail trading boom: 03:06–06:38
- Margin/leverage explained: 10:00–11:50
- Futures vs. options discussion: 11:50–14:02
- Settlement, delivery, and mark-to-market: 14:02–18:09
- Uses of futures (hedging/speculation): 21:50–24:38
- Crypto futures: 25:23–29:15
- Education efforts: 29:15–34:12
Conclusion
This episode demystifies the world of retail futures trading, spotlighting both the immense opportunities and risks. The CME’s focus on accessibility and education appears to be fueling a surge in retail participation—a trend both the hosts and their guest see as enduring, not fleeting. Anyone tempted to experiment with the power (and perils) of leverage, or just curious how futures markets actually function, will find this episode a practical resource and a lively, instructive listen.