Why would you want to short SPY instead of S&P futures?

Discussion in 'Index Futures' started by Maverick2608, Mar 16, 2019 at 3:47 PM.

  1. Shorting SPY: payment of short fee rate; higher taxes in the US; usually higher commission.

    Are there any reasons why you would want to short SPY instead of S&P 500 futures?
     
    Last edited: Mar 16, 2019 at 4:45 PM
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  2. Robert Morse

    Robert Morse Sponsor

    If you do not have a future’s account and do not want one.
    If the size of the future contract is too big for you.
    If you have a PMA and want to hedge an SPX option position and want the margin offset.
     
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  3. comagnum

    comagnum

    Some traders may have a long term short using SPY they are planning to hold beyond a year - no rolls & lower taxes. Some of these traders will use futures to trade around their core SPY position. This keeps their trading costs lower, since they only need to trade in one direction with futures, & its a work around for the futures wash sales rule - its still a wash sale, but its legal this way.

    Some traders may use SPY so they will not get shaken out of their position overnight.
     
    Last edited: Mar 16, 2019 at 5:04 PM
  4. Robert Morse

    Robert Morse Sponsor

    Futures are 1256 contracts, so MTM and no wash sales. Your 1099 is just a simple gain or loss.
     
  5. comagnum

    comagnum

    Last edited: Mar 16, 2019 at 5:51 PM
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  6. sle

    sle

    That. Also, if you are delta-hedging a SPY option position and do not want to deal with delivery.
     
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  7. %%
    Amen and since PT Jones likes the futures, why try to compete with him??And believe it or not something like SDOW also pays a dividend.......... And have to close our a contract/panic selling dont have to close SDOW @ all- may want to but BIG difference between have to + want to. Dont know if SDOW if liquid enough for daytrading??
     
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  8. johnnyrock

    johnnyrock

    Position sizing.