sizing futures pair

The spread ratio of exchange given is not always correct, because prices change all the time. Not just index future i wanted to trade, but this also applies to all futures out there as well

 

Using IV is a rather curious choice... I am not sure what the underlying rationale for such a choice would be.

 

its mainly margin relief for small account user, i can always adjust to notional value based

 

If it's for margin relief, surely you'd want to check what portfolio margin methodology your broker uses (it's not necessarily going to be the same as the exchange) and use that? I am not really sure why you'd choose to start with IV-derived weights, if you're just trying to obtain margin relief.

 

Let's just say you need 2.8 /CL for 1 /ES, its gonna required you alot more margin than
/ES with 10% IV = $10000
/CL with 25% IV = $10000
so you only need to do 1 : 1 ratio, which effectively low down the required margin for a pairs trade

 

I am very confused by this... What exactly are you trying to achieve in the first place?

 

Pairs Trading of /ES and /CL
usually by doing this, people weigh both these future by using Notional Value, but what im trying to achieve is using Implied Volatility to weigh both of this product.
My question is should i using Implied Volatility/IV index shown in Option Statistic below of Thinkorswim Trade platform? Am i using the right IV?

 

Don't do it deonyang. You'll lose money on this. The market favors those who are patient.

 

okay, thanks for advice
im not throwing on any trade, im just trying to learn

 

Thank you. I will sleep better tonight.