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SPOT INDEX
Spot Index is an overall equity market performance indicator which has its value derived from the overall performance of all the top listed stocks in that particular market. Generally the Spot Index reflects the overall trend indicator of the whole market performance at any given time. When most of the listed stocks having a positive gain then so will the Spot Index that represent that market, and likewise the opposite is also true.
As a speculator, if you have an opinion on the whole market in general, as opposed to any individual stocks, you can buy or short the whole market by buying or selling the Spot Index.
Spot Index also an instrument widely used by stock traders to temporarily protect against market declines,
or “ lock in ‘' portfolio profits, without having to sell off good, dividend paying stocks that are part of their longer term investment goal.
Spot Index can be likened to “ bear market insurance'', a hedge instrument.
There are over 70 listed Spot Index around the world, and among the 3 most active are :
JPM - Spot Index for Japan Markets
HKM - Spot Index for Hong Kong Markets
USM - Spot Index for US Markets |