Options Trading Tutorial

Can one buy shares in Dow Jones or S&P?

I am curious about day trading and wondered if I can actually buy shares of S&P or Dow? I realize we can but Index mutual funds but is there a way of actual buying stocks of the index? Perhaps futures or options are the way to play the index? Any suggestions between futures or options? Advantages or disadvantages? I am seeking this information for a family member who is now living overseas and wants to play the US market index. Thank you.

Public Comments

1. ETFs (exchange traded funds) ...DIA (Dow Jones) ....SPY (S&P 500)
2. . . . which means that, yes, one could buy and sell every stock in either, or both, indexes. For the Dow Jones Industrial Average, it currently consists of these 30 companies: 3M Company DuPont Kraft Foods Inc. Alcoa Incorporated Exxon Mobil Corporation McDonald’s Corporation American Express Company General Electric Company Merck & Company, Incorporated AT&T Incorporated General Motors Corporation Microsoft Corporation Bank of America Corporation Hewlett-Packard Company Pfizer Incorporated Boeing Corporation Home Depot Incorporated Procter & Gamble Company Caterpillar Incorporated Intel Corporation United Technologies Chevron Corporation International Business Machines Verizon Company Citigroup Incorporated Johnson & Johnson Wal-Mart Stores Incorporated Coca-Cola Company J.P. Morgan Chase & Company Walt Disney Company Obviously, one could use this as a shopping list. Or one could buy a Dow Index fund. Because it’s a much longer list, I won’t be copying the components of the S&P 500 here. As the name implies, there are 500 companies in the list; the current contents are at the link. Again, one could use that as a shopping list, or one could by a index fund. If one intends to buy and/or sell all 500 at the same time, may I suggest investing the programming talent into appropriate software might be a good investment? ;) If your relative overseas understands how to trade futures and options, then these lists will be all that is necessary to estimate the risks and rewards. If your relative doesn’t already understand those speculative (not investment!) vehicles, then I advise learning what futures and options are, and how their misuse can multiply risk (sometimes catastrophically), before using them.