I never looked at futures so this may be a stupid question: Are index futures essentially the same as buying the Index? If so, the only advantage I can think of is maybe lower margin requirements. Do I have it right? Don
Bought 20 Puts SPY 32 @ 1.05 Gotta make this work!!!!!!!!!!!! Although ... I'll need to look more into this, not sure if this is considered a "future". Forgive my ignorance, I am a mere neophyte. Admittedly so.,
Don't trade it because....? Because they're less riskier than options? Because there's no Greeks to worry about which only serve to complicate matters? Because the only thing you have to worry about at expiration is rolling over into the next contract the week before expiration? Because you can use stops to actually manage risk? Because you can buy and hold for a longer term than you can options? Because some futures (Like Emini-s&ps) are far more liquid with tighter spreads and more participants than options? Not seeing the downside to futures versus options yet...
No it's not a future. The future for the s&P is traded on the CME, not CBOE. Symbol ES or SP. Current contract month is June. Current price as of today 11:54 GMT-5 is 1315.00. Down 12.50 from yest. close. That would equal profitwise 12.50 * $50/ contract = $625/contract.
I knew that, just playing dumb,. Don't have the time to learn all there is to know about futures this morning. BUT I DO NEED TO MAKE SOME $$$$$$$ SPY puts are low hanging fruit today I think I'll defnitely look into futures,... I like smooth curves!
Yes, you are essentially buying the index. As far as margin requirement, lower than what? What are you comparing the futures to? Another advantage is that the futures tracks the cash to a close degree. Plus you can't lose all you money on one trade like you can with option buying when you're wrong on direct or delta/theta. The futures do not go worthless. Or I should say, no one, let's them go worthless. You simply roll them over into the next contract month(exit current month, enter next month). They expire every three months. In addition, if you fall below maintenance margin requirement, you'll either get a margin call or have your position liquidated. But then again, you can use stops long before that happens. I never had a margin call. In any event, the S&P would have to go 15 points against you before you had a margin call if you went with exchange minimums. Put up more money than the minimums and you can adjust the amount of points before a margin call.
add 10 more SPY 32 puts at 1.25 Rule Number 1: NEVER MARRY AN OPTION POSITION!!!!!!!!! I grew too attached to these suckers, could never let go!
re: "As far as margin requirement, lower than what?" In other words, is buying Index futures cheaper than buying the Index itself (e.g. SPY)? Obviously you have to put up more cash to buy SPY, but I assume Index futures include a carrying cost which makes holding the SPY comparable in cost. If costs are comparable as I suggest above I guess the big advantage of futures is the leverage they provide, no?
Okay caught a break. Bought 30 puts average 1.10, sold at 1.60. Needed it. Wish I would have bitched earlier so ddnunbar, could have reminded my of the damn S&P earlier. Would have got in much earlier. Thanks. Never give up!
I may regret biting, but people wrongly treat options like they're mysterious, dangerous beasts. Quote from ddunbar: Because they're less riskier than options? Grammar aside, what would ever make you think that futures are less risky than options? Most option positions I'm in have a defined risk/reward profile, and a "known" probability of a win. If a plane crashes into the Empire State Building tomorrow, I know how much I'll lose--how about you? Because there's no Greeks to worry about which only serve to complicate matters? That's like saying, "Margin only complicates matters", or "Limit orders only complicates matters". I trade greeks, just like you trade price action. Because the only thing you have to worry about at expiration is rolling over into the next contract the week before expiration? You can roll options if you'd like. Or let them expire. Or exercise them. Or cover them. 3 dimensions instead of 2 doesn't make for bad trading. Because you can use stops to actually manage risk? I can use stops. That aside, my positions are generally defined risk. Instead of getting stopped out 2% below the current price, I can stay in forever and never lose more than the equivalent of 2%. Because you can buy and hold for a longer term than you can options? This is a nonsequitur. You can hold LEAPS for several years if you'd like. Theta really only becomes a big factor in the last quarter or so. If you still don't want theta to affect you, trade a spread. If you were right, exercise your option to get the underlying, and hold it forever. Because some futures (Like Emini-s&ps) are far more liquid with tighter spreads and more participants than options? No argument there. There are some tight options markets, though. Here's the benefit of options over futures: Complex spreads... I can make money if the price doesn't move, if it moves a lot, if it moves quickly, if it moves slowly, if it moves up, if it moves down, if it stays above a support level, if it breaks out above a resistance level. I can consistently bet .25 to win $1 and be right 40% of the time. I can stay in a position when the market overreacts without increasing my risk. I will never get stopped out and watch the market run in the direction I wanted it to. I can make money on oscillations with minor adjustments. I can decide how sure I am about a directional bet, and still make money if I'm wrong. Futures are linear. Options are 3 dimensional. I love options.