Is there an alternative to the SPY that is cheaper per share? My betting strat calls for leveraging up when certain price patterns occur (specifically, reverse movement in a derivative Elliott wave). For example, if the price is moving for me, I'd like to leverage up 200/300/500 shares to 1000 total. The problem is the total cost. Today, the SPY stands at about $226 per share, and so to leverage up to 1000 shares would require USD $226,000. I simply don't have that much money in my account. I've Googled around, and tried: 1. Leucadia National (LUK). It doesn't quite move like the SPY. 2. Investing into MSFT, as it makes up more than 2% of the SPY, and is 2nd only to AAPL in weighted value. Problem is that it is subect to MSFT-specific forces, and can get a little wild and spikey. 3. The E-spy mini (?). I've seen it mentioned in several books and Web sites, but I haven't figured out how to invest in this. 4. The Q's (QQQ), but this is a little tech-heavy. 5. The DJIA diamonds (DIA), but this is almost as expensive. Any suggestions? Thx Keith :^D
Your best bet is the SPX emini futures. 1 future equals 500 shares of SPY, and will require margin in the neighborhood of $6,000.
Near term Weekly options on SPY have very tight spreads. You can buy ITM puts or calls to accomplish your leverage.
I don't understand why people bother trading SPY when the far better/more-liquid/less-transaction-costs ES (futures on S&P500) is available. ES leads SPY anyway so you're already behind the curve trading SPY....
1 ES exposure is 500 shares of SPY. I'm practicing with 1 lot of SPY and intend on moving up to ES, but I don't want to get that much exposure until I'm good and ready? When you say that it leads, I assume that that lead is still fast enough that a human can't take advantage of it.
I prefer SPY over ES, why? SPY has a 1 cent spread, whereas ES trades in .25 ticks. Thats equivalent to 2.5 cents of SPY, overtime that extra spread adds up. Intraday 4-1 leverage is plenty. Plus its a lot easier to scale in and out with SPY given that you can buy/sell as little as 1 share. With ES you are stuck with 1 contract sizes
Maybe doable for investing/longer term trading, but pointless for daytrading IMO. What are your transaction costs? A roundtrip for 1 SPY would cost me 0.30% in costs alone... so if you are practicing, I hope you're taking into account that you have to at least cross that threshold? In ES costs are way less. By leading I mean it's the more liquid market and because liquidity leads an illiquid market, you get better fills etc with ES. But I get you would want to practice in a more safe way...