S+P Premium levels as timing tool?

Discussion in 'Trading' started by aspenboy, Jul 1, 2006.

  1. Intraday purposes. Has anyone found it beneficial to monitor the prem/discount levels as an aid to entry/exit timing?
    Or,is it too random w/too much noise to be of any good?
    Also, why is it I see the futures price always move before the index itself? Frontrunning before a large order or program?
    I think I may buy/enter sometimes when the premium has already expanded significantly as oppossed to buying when the actual level is lower-but this may be trying to catch a bottom,etc...too instead of waiting for price confirmation.
    Am i making any sense?

    Also,anyone monitor the program trigger levels(indexarb.com). ?
  2. 1. The only thing I ever found with the premium was when it had been at significant discount, then rallied to fair value... there was usually more to go on the upside.

    2. The futures move before the index, but not in a way you can take advantage. It's because the price change gets reflected in futures almost instantly, but there is a small time lag in the mechanics of getting the price changes posted to the ticker.
  3. patoo


    I always thought the when $PREM gets abnormally large, you are supposed to close your position.

    The idea being either some big player(s) are manipulating the futures market to their advantage and you are gonna lose.


    There is some screw up in the data feed, calculations, etc