** What the heck are they playing here??? Part 1 **
I am sure some of you lurkers asked the same thing.
This thread's been #1 on the hot subject for past few days,
but I had no idea what the heck is going on here...
So I asked a few players and here are some of the answers I got. Hope it helps...
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They are playing S&P500 index future.
How to trade S&P500 index?
You can trade the S&P 500 index and many other indexes through one of 3 vehicles:
1) SPY (listed Amer. Stock Exch), which stands for S&P Depository receipts. These trade at
exactly 1/10 the value of the S&P 500, so 1 share costs about $136. It moves up and down in
direct sync with the S&P 500.
2) Options on the S&P 500. Calls or puts. Buy calls if you think it's going up, and buy puts if you
think it's going down. The big danger with options is you have to pay a time and volatility premium
to get them, unless you're buying a deep in the money. But you get more leverage on your money
than by just buying the SPY. Grab an option characterists book from your broker for a more
indepth description.
3) Futures on the S&P 500, traded on the CME in Chicago. You can start with an E-mini, that
gives you $50 for every point you capture, or takes from your account $50 for every point you
lose. So if you buy @ 1355 and sell @ 1365, you made 10 pts. X $50/pt= $500.00 made. You
would need $6,000 in a futures account to be able to purchase/trade an emini.
This futures trading is what you are seeing us do on the Players Club thread. Except the contracts
we're trading are worth $250 per point, which is the standard S&P contract. Each contract requires
$25,000 in an account to trade. |
