Who are the commercials in SP/ES?

Discussion in 'Index Futures' started by iggy9807, May 17, 2010.

  1. iggy9807


    I am trying to understand who are the commercial hedgers in these markets. Whether they are smart or dumb money esp. with regard to large speculators (hedge funds, etc).

    Any insight would be appreciated.
  2. ....mutual funds, trading firms, insurance companies, pension funds, investment banks. When they hedge, they are "hedgers". When they are un-hedged, they are speculators. It's up to you as to whether they are smart or dumb. :cool:
  3. Is it true that most of these don't short stocks? And if that's true then when would they buy the ES as a hedge? When they sell their stocks?
  4. Let us say you are Fido. As the day evolves you observe that your 401K clients are getting bullish about the S&P 500 and placing net positive transfers to be executed after the close at the closing valuation. You guarantee them that price. You connect the dots.
  5. Ok, i'm the fund and I'm selling the client 1000k shares midday, but I can't buy them until the close. My risk is that the the price goes up and I have to cover my short at a higher price. So I can hedge that risk by buying the futures as a hedge.
  6. You got it. And also in the early aftermarket session. And unwind into the composite stocks the next morning.