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Technology Stocks : All About Sun Microsystems
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To: Charles Tutt who wrote (34035)7/29/2000 12:41:35 PM
From: High-Tech East  Read Replies (1) of 64865
 
CT and JDN. Short or long positions in S&P 500 futures have no impact on any of the 500 securities underlying the index. Buyers and sellers of futures and options are only buying and selling from each other. However, the direction of the S&P 500 index itself does directly impact the value of the the future's contract (but not the other way around).

If I am short the S&P futures, and the S&P 500 index rises significantly, I would certainly be squeezed, but only by the party from whom I borrowed the contract. S&P futures are moved by the S&P Index, not the other way around. The S&P futures are a market unto themselves.

Whether shorts or longs in S&P futures win or lose, the capitalization of the stocks in the S&P are not impacted, one way or the other.

Ken Wilson
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