What is the NASDAQ-100 Index?
The NASDAQ-100 is an index which was formed in 1971 on a computer system by the National Association of Securities Dealers. NASDAQ is an acronym for National Association of Securities Dealers Automated Quotations. The object of establishing this index was to provide to investors a speed and transparent system to trade securities.
The NASDAQ-100 is also considered as the benchmark index for technology stocks in America.
Uses of the NASDAQ-100 Index
The NASDAQ-100 gives investors the overall performance of more than 3000 publicly listed companies in America.
Investors are able to use this index as a form of hedging their investment portfolio. This is done by taking a long or short futures contract over their stock.
Risks of the NASDAQ-100 Index
NASDAQ-100 holds some of the worlds largest technology companies such as Google, Microsoft and Apple. With technology companies comes the inherent risk of higher volatility. An example of this could be the dot com crash after March of 2000 where the NASDAQ-100 fell over 80%.