1 /MES futures contract has a notional value of 5 * index price. Currently that is $30k. To buy this contract, I am required to set aside $2500 as a good faith deposit for the contract.
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This gives me a notional exposure of $30k in the S&P 500 at the cost of $2500. The $2500 is only the bare minimum, and it is usually advised to keep 2-5x of cash to handle downswings (see [below](#futures-margin-is-different)). So I set aside $10k as a safe amount of cash for this contract. That means I get a notional exposure of $30k at the cost of $10k.
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This gives me a notional exposure of $30k in the S&P 500 at the cost of $2500. The $2500 is only the bare minimum, and it is usually advised to keep 2-5x of cash to handle downswings (see [below](#futures-vs-equities-margin)). So I set aside $10k as a safe amount of cash for this contract. That means I get a notional exposure of $30k at the cost of $10k.
That $10k needs to come from somewhere. I could sell $10k of equities. That would give an overall leverage of (100-10+30)/100 = 1.2.
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### Futures margin is different
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### Futures vs equities margin
Futures margin is confusingly not the same as equities margin. When you buy or sell a futures contract, it costs nothing other than the commission. Instead, you put up in cash a good faith deposit. which is called its margin requirement. Every day, depending on whether the position moves for or against you, it is marked to market and funds are either deducted or added to your deposit. You get that deposit back, along with any profit or loss, when the contract closes.