What is the effect of dividends on the futures price of an index
A futures contract is based upon a particular delivery date.  In the case of a stock index futures contract is a cash settled futures contract based upon the stock index value at a particular point in time (i.e. this is when the final settlement is determined). In your example, the S&P 500 (SPX) is a price return index - that is, it is not affected by dividends and therefore dividends are not incorporated into the index value.  Dividends will affect the price of the constituent stocks (not necessarily by the same amount as the dividend) so they do have influence on the stock index value.  Since the dividends are known ahead of time (or at least can be estimated), this has already been factored into the futures price by the market. In terms of the impact of a dividend by AAPL, AAPL is approximaetely 3.6% of the index.  Apple pays out dividends 4 times a year (currently paying out $0.52 dividends).  Assuming the market is otherwise steady and AAPL drops by $0.52 due to the dividend and Apple is priced at around $105, this would result in a drop in the index of 0.0178% or around 0.35 points. Interesting fact:  There are some futures contracts that are based upon Total Return indexes, such as the German DAX and the above logic would need to be reversed.
In order to understand how much you might gain or lose from participating in the futures markets, it is important to first understand the different ways in which the slope of the futures markets can be described. In many of the futures markets there is a possibility of somebody buying a commodity at the spot price and selling a futures contract on it. In order to do this they need to hold the commodity in storage. Most commodities cost money to hold in storage, so the futures price will tend to be above the spot price for these commodities.  In the case of stock index futures, the holder receives a potential benefit from holding the stocks in an index.   If the futures market is upward sloping compared to the spot price, then it can be called normal. If the futures market is usually downward sloping compared to the spot price then it can be called inverted. If the futures market is high enough above the spot price so that more of the commodity gets stored for the future, then the market can be called in contango. If the futures market is below the point where the commodity can be profitably stored for the future, and the market can be called in backwardation. In many of these cases, there is an implicit cost that the buyer of a future pays in order to hold the contract for certainly time. Your question is how much money you make if the price of gold goes up by a specific amount, or how much money you lose if the price of gold goes down by the same specific amount.  The problem is, you do not say whether it is the spot price or the futures price which goes up or down.  In most cases it is assumed that the change in the futures price will be similar to the change in the spot price of gold.  If the spot price of gold goes up by a small amount, then the futures price of gold will go up by a small amount as well.  If the futures price of gold goes up by a small amount, this will also drive the spot price of gold up.  Even for these small price changes, the expected futures price change in expected spot price change will not be exactly the same.  For larger price changes, there will be more of a difference between the expected spot price change in expected future price change.   If the price eventually goes up, then the cost of holding the contract will be subtracted from any future gains.  If the price eventually goes down, then this holding cost should be added to the losses.  If you bought the contract when it was above the spot price, the price will slowly drift toward the spot price, causing you this holding cost.  If the price of gold does not change any from the current spot price, then all you are left with is this holding cost. Hart's answer regarding the difference between an index and a stock aside, remember that dividend yield is a passive measure.  It takes the announced dividend (which is a $/share amount) and divides it by the current market price.   So you can't assume that if you buy a stock that had a dividend yield of 4% for $100 that you're guaranteed 4% of the stock price in dividends.  If the price of the stock doubles, you'd still get $4, but the yield would drop to 2%.  Or the company could reduce (or even suspend) its dividends, which would reduce the yield if the stock price stayed flat. For an index like the S&P, it's easier to measure dividends on % yield terms rather then $/share terms since you'd have to own shares in every single company to get that amount, but on average the stocks in the S&P 500 pay X% in dividends (which are typically quarterly) - some pay more than that, some less, and some none at all. "Someone who buys a stock is fundamentally buying a share of all future dividends, plus the future liquidation value of the company in the event that it is liquidated.  While some investors may buy stocks in the hope that they will be able to find other people willing to pay more for the stock than they did, that's a zero sum game.  The only way investors can make money in the aggregate is if either stocks pay dividends or if the money paid for company assets at liquidation exceeds total net price for which the company sold shares. One advantage of dividends from a market-rationality perspective is that dividend payments are easy to evaluate than company value.  Ideally, the share price of a company should match the present per-share cash value of all future dividends and liquidation, but it's generally impossible to know in advance what that value will be.  Stock prices may sometimes rise because of factors which increase the expected per-share cash value of future dividends and liquidations. In a sane market, rising prices on an item will reduce people's eagerness to buy and increase people's eagerness to sell.  Unfortunately, in a marketplace where steady price appreciation is expected the feedback mechanisms responsible for stability get reversed.  Rapidly rising prices act as a red flag to buyers--unfortunately, bulls don't see red flags as signal to stop, but rather as a signal to charge ahead. For a variety of reasons including the disparate treatment of dividends and capital gains, it's often not practical for a company to try to stabilize stock prices through dividends and stock sales.  Nonetheless, dividends are in a sense far more ""real"" than stock price appreciation, since paying dividends generally requires that companies actually have sources of revenues and profits.  By contrast, it's possible for stock prices to go through the roof for companies which have relatively few assets of value and no real expectation of becoming profitable businesses, simply because investors see rising stock prices as a ""buy"" signal independent of any real worth." When you invest in stocks, there are two possible ways to make money: Many people speculate just on the stock price, which would result in a gain (or loss), but only once you have resold the shares. Others don't really care about the stock price. They get dividends every so often, and hopefully, the return will be better than other types of investments. If you're in there for the long run, you do not really care what the price of the stock is. It is often highly volatile, and often completely disconnected from anything, so it's not because today you have a theoretical gain (because the current stock price is higher than your buying price) that you will effectively realise that gain when you sell (need I enumerate the numerous crashes that prevented this from happening?). Returns will often be more spectacular on share resale than on dividends, but it goes both ways (you can lose a lot if you resell at the wrong time). Dividends tend to be a bit more stable, and unless the company goes bankrupt (or a few other unfortunate events), you still hold shares in the company even if the price goes down, and you could still get dividends. And you can still resell the stock on top of that! Of course, not all companies distribute dividends. In that case, you only have the hope of reselling at a higher price (or that the company will distribute dividends in the future). Welcome to the next bubble... No can't make quick bucks. It depends very much on what the strike price was. Dividends which are below 10% of the market value of the underlying   stock, would be deemed to be ordinary dividends and no adjustment in   the Strike Price would be made for ordinary dividends. For   extra-ordinary dividends, above 10% of the market value of the   underlying security, the Strike Price would be adjusted. Refer more at NSE India Edit: The Nifty consists of 50 stocks. The largest one has weight of around 8%. So 10% on this will only translate to .8% on index. "Let me provide a general answer, that might be helpful to others, without addressing those specific stocks. Dividends are simply corporate payouts made to the shareholders of the company.  A company often decides to pay dividends because they have excess cash on hand and choose to return it to shareholders by quarterly payouts instead of stock buy backs or using the money to invest in new projects. I'm not exactly sure what you mean by ""dividend yield traps.""  If a company has declared an dividend for the upcoming quarter they will almost always pay.  There are exceptions, like what happened with BP, but these exceptions are rare.  Just because a company promises to pay a dividend in the approaching quarter does not mean that it will continue to pay a dividend in the future.  If the company continues to pay a dividend in the future, it may be at a (significantly) different amount. Some companies are structured where nearly all of there corporate profits flow through to shareholders via dividends.  These companies may have ""unusually"" high dividends, but this is simply a result of the corporate structure.    Let me provide a quick example: Certain ETFs that track bonds pay a dividend as a way to pass through interest payments from the underlying bonds back to the shareholder of the ETF. There is no company that will continue to pay their dividend at the present rate with 100% certainty.  Even large companies like General Electric slashed its dividend during the most recent financial crisis.  So, to evaluate whether a company will keep paying a dividend you should look at the following: Update: In regards to one the first stock you mentioned, this sentence from the companies of Yahoo! finance explains the ""unusually"" dividend: The company has elected to be treated as a REIT for federal income tax purposes and would not be subject to income tax, if it distributes at least 90% of its REIT taxable income to its share holders." News-driven investors tend to be very short-term focussed investors. They often trade by using index futures (on the S&P 500 index for instance). I'm not entirely sure about some of the details in your question, since I think you meant to use $10,000 as the value of the futures contract and $3 as the value of the underlying stock. Those numbers would make more sense. That being said, I can give you a simple example of how to calculate the profit and loss from a leveraged futures contract. For the sake of simplicity, I'll use a well-known futures contract: the E-mini S&P500 contract. Each E-mini is worth $50 times the value of the S&P 500 index and has a tick size of 0.25, so the minimum price change is 0.25 * $50 = $12.50.  Here's an example. Say the current value of the S&P500 is 1,600; the value of each contract is therefore $50 * 1,600 = $80,000. You purchase one contract on margin, with an initial margin requirement1 of 5%, or $4,000. If the S&P 500 index rises to 1,610, the value of your futures contract increases to $50 * 1,610 = $80,500. Once you return the 80,000 - 4,000 = $76,000 that you borrowed as leverage, your profit is 80,500 - 76,000 = $4,500.  Since you used $4,000 of your own funds as an initial margin, your profit, excluding commissions is 4,500 - 4,000 = $500, which is a 500/4000 = 12.5% return. If the index dropped to 1,580, the value of your futures contract decreases to $50 * 1,580 = $79,000. After you return the $76,000 in leverage, you're left with $3,000, or a net loss of (3,000 - 4000)/(4000) = -25%. The math illustrates why using leverage increases your risk, but also increases your potential for return. Consider the first scenario, in which the index increases to 1,610. If you had forgone using margin and spent $80,000 of your own funds, your profit would be (80,500 - 80,000) / 80000 = .625%. This is smaller than your leveraged profit by a factor of 20, the inverse of the margin requirement (.625% / .05 = 12.5%). In this case, the use of leverage dramatically increased your rate of return.  However, in the case of a decrease, you spent $80,000, but gained $79,000, for a loss of only 1.25%. This is 20 times smaller in magnitude than your negative return when using leverage. By forgoing leverage, you've decreased your opportunity for upside, but also decreased your downside risk. 1) For futures contracts, the margin requirements are set by the exchange, which is CME group, in the case of the E-mini. The 5% in my example is higher than the actual margin requirement, which is currently $3,850 USD per contract, but it keeps the numbers simple. Also note that CME group refers to the initial margin as the performance bond instead.