he Nasdaq-100 Index (NDX) is one of the world’s most influential stock market benchmarks, tracking the performance of the 100 largest non-financial companies listed on the Nasdaq Stock Market. Known for its tech-heavy composition, it’s a favorite among traders, long-term investors, and institutions seeking growth exposure.
In 2025, NDX continues to dominate headlines due to its strong correlation with mega-cap technology stocks, heightened volatility, and its central role in ETFs, futures, and options markets. Whether you’re an active day trader or a passive investor, understanding the Nasdaq-100 is crucial for navigating modern financial markets.
What is the Nasdaq-100 (NDX)?
The Nasdaq-100 is a modified market capitalization-weighted index that represents the 100 largest U.S. and international non-financial companies listed on Nasdaq. It includes major sectors like technology, consumer discretionary, healthcare, and industrials — but excludes financials like banks and insurers.
- Launched: January 31, 1985
- Exchange: Nasdaq
- Number of Constituents: 100
- Index Type: Modified market-cap weighted
- Ticker Symbol: NDX
Quick Fact: NDX is different from the Nasdaq Composite Index, which includes over 3,000 companies across all sectors.
History & Evolution of NDX
Launch and Early Years
The Nasdaq-100 was launched in 1985 alongside the Nasdaq Financial-100 Index. The goal was to create a benchmark for growth-oriented companies while excluding banks and insurers to reduce sector concentration.
Rebalancing & Weighting Methodology
NDX uses a modified market-cap weighting system:
- Larger companies hold greater weight, but capping rules prevent extreme concentration.
- The index is rebalanced annually in December, ensuring relevance and diversity.
- Quarterly reviews may replace underperforming companies or add fast-growing stocks.
Nasdaq-100 Composition & Sector Breakdown
The Nasdaq-100 is dominated by technology giants, but it’s also home to leaders in e-commerce, healthcare, communication, and consumer sectors.
Top Holdings (as of September 2025)
| Rank | Company | Ticker | Weight (%) |
|---|---|---|---|
| 1 | Nvidia | NVDA | 9.17% |
| 2 | Microsoft | MSFT | 8.79% |
| 3 | Apple | AAPL | 7.29% |
| 4 | Amazon | AMZN | 5.54% |
| 5 | Meta | META | 4.18% |
| 6 | Alphabet (C) | GOOG | 3.71% |
| 7 | Alphabet (A) | GOOGL | 3.69% |
| 8 | Broadcom | AVGO | 3.32% |
| 9 | Tesla | TSLA | 3.01% |
| 10 | Costco | COST | 2.17% |
Data source: Nasdaq, September 2025
Sector Allocation
- Technology: ~62.5%
- Consumer Discretionary: ~18.6%
- Communication Services: ~9.4%
- Healthcare: ~4.6%
- Industrials: ~4%
- Others: ~1%
Recent Developments & Market Highlights
NDX Hits a Record High
On June 24, 2025, the Nasdaq-100 closed at 22,190.52, marking its highest level since February 2025 — driven largely by surging demand for AI-related stocks.
Explosive Options Activity
NDX has become a hotspot for options traders.
During July 2024’s tech-led sell-off, NDX options volume hit record highs, as institutional investors used puts for hedging.
Volatility Trends
With its heavy weighting in mega-cap tech stocks, NDX often experiences larger price swings than the S&P 500 — making it attractive for short-term traders seeking volatility plays.
How to Trade or Invest in NDX
You cannot directly buy the index, but there are multiple products that track its performance:
ETFs
- Invesco QQQ (QQQ): The most popular Nasdaq-100 ETF.
- QQQM: A low-cost alternative to QQQ.
- ProShares UltraPro QQQ (TQQQ): Leveraged ETF for aggressive traders.
Futures
- CME E-mini Nasdaq-100 Futures (NQ): Widely used by professionals.
- Micro E-mini NQ Futures: Lower margin requirements, ideal for retail traders.
Options
- Index Options (NDX): Offer direct exposure with cash-settled contracts.
- ETF Options (QQQ): Highly liquid and accessible for retail traders.
Trading Strategies for NDX
Trend-Following Strategies
- Use moving averages to identify bullish or bearish momentum.
- Combine MACD and RSI for timing entries.
Volatility Trading
- Straddles and strangles can profit from large price swings.
- Utilize VXN — Nasdaq-100 Volatility Index — as a volatility gauge.
Hedging with Options
- Portfolio managers often buy NDX puts to hedge against market downturns.
Nasdaq-100 vs Other Major Indices
| Index | Ticker | Companies | Weighting | Sector Focus |
|---|---|---|---|---|
| Nasdaq-100 | NDX | 100 | Modified Cap | Tech-heavy |
| Nasdaq Composite | IXIC | 3,000+ | Market Cap | Broader coverage |
| S&P 500 | SPX | 500 | Market Cap | Diversified |
| Dow Jones | DJIA | 30 | Price Weighted | Industrial-focused |
Future Outlook for NDX
- AI & Tech Growth: With Nvidia, Microsoft, and Apple leading innovation, NDX remains highly leveraged to AI-driven growth.
- 24/7 Trading Plans: Nasdaq is planning round-the-clock trading by 2026, which could increase global liquidity.
- Increased Options Activity: Expect continued growth in institutional hedging and retail participation.
Frequently Asked Questions (FAQs)
What does NDX stand for?
NDX is the ticker symbol for the Nasdaq-100 Index.
Can I invest in NDX directly?
No — but you can invest via ETFs, futures, or options.
How often is NDX rebalanced?
The index is rebalanced annually in December.
Why does NDX exclude financials?
To focus on innovation-driven companies and avoid bank-heavy distortions.
Q5. What’s the difference between QQQ and QQQM?
QQQM is a lower-cost version of QQQ, designed for long-term investors.
Conclusion
The Nasdaq-100 (NDX) remains one of the most important global benchmarks for tech-driven growth investing. In 2025, its influence extends across ETFs, futures, options, and global trading strategies. Whether you’re a long-term investor or an active trader, understanding NDX’s structure, composition, and trading opportunities is key to staying ahead.
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