Can you take a long term pos. in minis?

Discussion in 'Index Futures' started by Harry123, Feb 10, 2003.

  1. Harry123

    Harry123

    I'm curious if you can take a long term position in the minis? Understanding that they expire on a quarterly basis do I need to close out my position before they expire and roll it over or does my broker know to do this automatically? In other words lets say I wanted to go long term short for a year and walk away if I came back to the computer would I still have the minis position be it spx or naz...or would I have lost my position because it would have ended at a quarterly change over? Thks in advance,
     
  2. you're not only gonna lose your position, you're gonna lose your shirt. Don't do it. It's not a long term investment vehicle. It's made for trading.
     
  3. Your broker will NOT roll your contracts automatically. When they expire they're cash settled and that's it. If you want to roll them, you've got to do it yourself.

    However, don't do anything with futures until you learn a lot more about them. You should never trade/invest in anything unless you know as much as possible about it.

    So while your question is a good one to ask, if you're asking it - it means you don't know enough about the instrument to be thinking about doing anything with it right now. Learn a lot more about them - they're a derivative and have their own dynamics - it's not just a stock alternative with better margin.

    If you're looking for a long term S&P or NAZ position, you might want to look at the SPY and QQQ as an alternative.
     
  4. you can check the spread between the Mar and June contract. That is what you'll pay to save yourself one rollover. Otherwise, on rollover day they become very tight.

    Even for longterm positions, I think e mini is superior to etf due to tax treatment and zero margin cost. But yes, you the trader must roll your own every quarter.

    Compare, spread, margin, tax, and dividends and commissions. Most likely you will just go with SPY or QQQ. But theoretically, I think emini wins.
     
  5. OK, if you're suckin' me in... you got me. The JUN could trade below the Mar for a few minutes?? on some mechanical thingy at expiration. Other than than that, they'll both trade at their appropriate fair value-ish. It's not like a backwardation in a commodity. :D
     
  6. There are currently a number of futures contracts with JUN03 lower than MAR03. See E-Mini S&P500. Very nice also HSI (Hang Seng) futures, JUN03 is more than 100 points lower than MAR03 contract.
     
  7. it sounds like this guy doesn't want to check his positions every day, so futures are probably not the way to go, better off with unleveraged positions in something like QQQ or SPY.
     
  8. so then that would be great if you want to stay long. You can sell your long MAR and roll out to JUNE and buy it at a discount. But the problem is, if you are long MAR, you may not have enough money left to roll out to JUNE.
     
  9. OK you guys, let's work this out.

    1. The Jun could be showing last trade -100 from March, but only because the Jun is so thinly traded and its pricing is just lagging the front month.... you know, the Mar was bid up a bit, but there was no corresponding play on the Jun? If you tried to actually buy it there, maybe fill 150 higher???
    2. On Hee-Haw they show "fair value" for the Mar at -100 ish. Considering the cost of carry, I don't understand why it would be a negative number... and as it doesn't really matter to trades, I handn't given it any thought. (Now that I have, I still don't know why "fair" would trade at a discount to cash. Do you?) :D
     
  10. OK you guys, let's work this out.

    1. The Jun could be showing last trade -100 from March, but only because the Jun is so thinly traded and its pricing is just lagging the front month.... you know, the Mar was bid up a bit, but there was no corresponding play on the Jun? If you tried to actually buy it there, maybe fill 150 higher??? Beside, you already know thin markets may not reflect current value accurately.
    2. On Hee-Haw they show "fair value" for the Mar at -100 ish. Considering the cost of carry, I don't understand why it would be a negative number... and as it doesn't really matter to trades, I handn't given it any thought. (Now that I have, I still don't know why "fair" would trade at a discount to cash. Do you?) :D
     
    #10     Feb 11, 2003