Newbie Questions

Discussion in 'Index Futures' started by luh3417, Jun 30, 2006.

  1. luh3417


    I started with shorting ES from time to time as a hedge, but I want to expand. I'll keep reading the old posts but maybe someone can help.

    Index futures seem like an ideal instrument. Why would someone want to trade an index fund or ETF when there is a future available? The future would have lower costs and much more leverage, and its easy to short them.

    Other than ES what are popular investments? There's QQQQ... not a future but what are the differences... less leverage. Is there an index future contract equivalent to QQQQ?

    Are there like "ADR" index futures... what I mean is, I'd like to diversify into an Asian or European index (and into their currencies) without having to open a Euro account. I'm at IB.

    One last thing that puzzle me a bit is "what happens to the dividends" if that makes sense, comparing say ES to some actual index fund that bought all 500 stocks.
  2. MTE


    Not everyone is comfortable with futures trading as they don't understand them or for some other reason.

    QQQQ is an ETF, so it is like buying a regular stock. E-mini Nasdaq-100 futures are the equivalent, like ES to SPY.

    For int'l diversification see CME.

    Dividends are priced into the futures through the cost of carry.
  3. eco


    Good Asian futures: HSI SGXNK STW KOSPI
    Good European futures: ESTX50 GBL DAX

    Plenty to play with there. Do your due diligence though.

    Best of luck.
  4. luh3417


    Agree, many people think pork bellies when they hear the word futures. I think they're really missing out though, when it comes to index futures.

    Looks like Kospi, DD/DJ/YM, DAX, ER2, are also popular. Lemme see if IB offers those. Here it is, NQ, excellent, thanks! I assume the above are high volume.

    When you say that QQQQ is like a regular stock, are you saying it can drift above or below its actual asset value, like a fund that trades at a discount?

    BTW, anyone know of any books on trading index futures?
  5. MTE


    No, I mean the leverage is the same as buying a stock. In other words, very little leverage and you actually need the cash to buy it.
  6. luh3417


    I see. Can anyone think of a reason why you'd use QQQQ ETF instead of NQ index future then?

    Will investigate. I suppose they're liquid. I wonder if IB offers them and I wonder if I need any non-US-dollar accounts to trade them?
  7. MTE


    - Buying a stock is easy, anyone can do it. Buying a futures contract is more complicated, a futures contract expires so you need to roll it if you want to hold for longer term.

    - Some people don't want leverage.

    - Futures require a futures broker, while you can buy QQQQ in a regular stock brokerage account.
  8. MTE


    With all this talk about ETFs vs. Index Futures, how about Futures on ETFs.:)
  9. Tums


    how about options on the futures of ETF?
  10. MTE


    Don't have those yet, but I'm sure they will eventually.
    #10     Jun 30, 2006