David--
I think (think) that if you sell 1000 contracts of USRX April 75 calls and simultaneously (or rather not quite; one transaction will be made before the other) buy 1000 contracts of USRX April 75 calls, you will effectively have closed your position. That is, I suspect you just can't do this. If you want to play both sides of the fence, I believe you'd have to buy (or sell) both puts and calls.
And: your example actually presupposes 4 positions being opened simultaneously, which would result in the creation of 4000, not 2000, new units of OI.
I don't trade futures, but I do have a book. Here's what the author has to say about this subject, more or less: "Except in a few instances it is not legal to be both long and short the same futures contract in the same account. When you buy a December T-bond, for example, your broker's computer checks your account to see if you are already short a December T-bond. If you are, the trade is treated as a closing transaction. If you are not presently short the December T-bond, your trade is logged in as an opening transaction".
The exceptions: "day trades, where you open and close the transaction within the same trading session; a futures position taken to meet the exercise of a futures option you have sold short; a bona fide hedge; the sale of futures during the deliver period for the purpose of making delivery; and, in certain circumstances where different independent money managers control separate accounts for the same investor".
Hope this, uh, helps... Anyone else have thoughts on the subject?
Janice |
