ES Emini futures Options

Discussion in 'Options' started by StockApprentice, Apr 1, 2002.

  1. I Have once quick question.

    How many ES emini futures (S&P 500 emini) contracts does one ES futures option control?

    I personally think that it is one because IB doesn't require much margin, but I just wanted to check.

    I tried asking the IB help desk, but as usual they avoided my question and told me what the underlying instrument was....(Doh!...I've had that happened way too many times...)
  2. One, they are fungible 5 to 1.
  3. Fungible?
  4. If you are short 5 eminis and long 1 full, you are flat.
  5. OK, I'm quite confused.

    Are you saying that one es options contract controls 5 futures contracts?

    Or were you just comparing the emini to the full s&p futures contract?
  6. Thank you very much. I was on the cme website and couldn't find the link. Thank you!
  7. Has Anyone had an enlightening experiences selling these options?

    Should I stay away from them? What is the risk of exercise?

    Any thoughts?
  8. Yannis



    There are significant advantages in using futures (leverage, but one should be very careful because that thing cuts both ways.)

    There are also advantages in using futures options (leverage, while you are able to control the max amount you stand to lose.)

    I would caution you that, if fututes are sophisticated instruments (and therefore not for the beginner) options are even more sophisticated because now you have to deal with the several variables inherent in that instrument (the greeks, etc)

    No doubt, powerful trading methodologies can be based on futures options. What gives me a little pause is the nickname you have chosen. If you really consider yourself an apprentice, stay away from them.

    I think that the order of learning should be something like: stocks, futures, stock options, futures options, etc. the important thing here is that between each step you should feel that you have "graduated" ie, you have had sufficient success and confidence in your skills to warrant the move up.

    Many sophisticated futures traders use futures options to hedge large positions, in a different fashion than hedging stock positions, eg, in limitdown situations which are more threatening in the futures trading arenas.

    Of course, I may have misjudged you, in which case, best of luck!:)
  9. Sorry, missed the word "option", thought you were talking about something else.
    #10     Apr 1, 2002