hi guys, wondering this, as maybe one is cash settled and larger, but I can't figure out why when sizing even margin requirement, ES seems to have an edge on SPX even after commissions .. why is this? taken today: 2200 strike on SPX, premium is $135 with margin of 22,131k 2200 strike on ES, premium is $195 with margin of 23,641k I mean really they almost follow the same exact pricing, so what advantage would there be to SPX even adding commissions to ES, you come out ahead going ES, while also most SPX settles night, where ES is at close. Help me see the light
Perhaps what you are looking at is the premium basis between options on spot and (most likely) the prompt (nearest futures) contract.
As Andersen said, SPX options and ES options don't have the same underlying. One is the index and the other one the future.
Aside from the sensible, generic responses from AndersonBands and rb7, there is also the fact that the numbers are deeply fuqued. With the market at roughly 2725, the "options" in question would be calls, and would be so deep in the money as to be holding a 1.0 delta, and to be basically worth Market-Strike. Thus, 2725 - 2200 ≈ $525, give or take. A cite of ~$150 means the market reference was more like 2350 or so, which we h'ain't seen in a fur'bit.
They are both priced on the future pricing... so in effect they both have the same underlying. I think OP is probably looking at different maturities.... EDIT. some ES options maturities are based on a different future though... so yes, you're actually more correct than I initially thought ... Would come in handy if OP states which maturity he/she is looking at, my bet still is different maturities. EDIT2. you know what... OPs post doesn't make any sense... what are we talking about... not the calls, since those are about 500 ITM... so 195 is just a silly number. And if he's talking about the put... than that would be something like 5 years from now to get to that premium... so that doesn't make any sense either. My second guess is, he's looking at some random old data from yahoo.com