With stocks if the option is priced at 5 on the offer and you buy it, it costs you $500 per contract? How does this apply to futures options? How much does an option in this market cost you? Typically with the actual futures contract, the near month is the most active until traders start rolling over to the next month and generally you would want to do the same. What are some general characteristics concerning options liquidity, tight bid ask, which month, strike, accurate data sources, etc.? I didn't find the CME site to be of much help. Perhaps I wasn't looking in the correct area. Thanks so much!
Quoted as individual contract options. Round turn trading costs are approx $4. ie. OESV8P780 ES Put 780 @ 9.75 = $487.50 + $4 fees for 1 ES contract option. Options are cash transacted and are taken into consideration for SPAN portfolio margining. in otherwords an options hedge may offset overnight margin requirements for carrying longer term positions. Spreads are pretty tight RTH but go wide overnight. There are a plethora of types... EOM, weekly, european, american... ES and 6E options are pretty liquid...
Thank you! So take the price of the option * 50 to get the cost? Where does the $50 number derive from? How does this apply to other futures markets Dow, Nas, etc., with reference to the $50 "cost factor"? Thanks again!
Thats just for ES... $50 a point... NQ would be $20, 6E is $1250 if quoted as 1.xxx format. Typically quoted in points and multiplied by underlying's point value.
50 is just the multiplier they decided upon. It has no other significance. That's for the E-mini. CME also has a "big" S&P500 futures contract for which the multiplier is 250 - 5 times bigger. Even that is half the old "big" which had a multiplier of 500. Sometime after the crash of '87 they decided that was TOO big, and so they halved it. Every futures contract is different. The CBOT/CME grain futures are 5000 bushels each and the price is quoted in dollars per bushel, so the multiplier is 5,000. They also have a mini contract of 1,000 bushels each. In crude it's 1,000 barrels per contract. There's no rule - you just have to know the details for the contract you're trading. The info is available from the exchange, but you may have to hunt for it.