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Non-Tech : Quote.com QCharts
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To: Esteban who wrote (17950)1/24/2007 6:38:17 PM
From: Patrick Slevin  Read Replies (1) of 17977
 
You mean why would I care (as a trader) if it's cash settled?

I'd prefer a cash settled contract because I don't have to scramble to roll out or close it. It's my understanding even the pit market makers prefer to deal in the cash-settled options over the physical delivery options. I would guess it's more work for them to go through the process of reconciling the physical in some way.

As a Speculator you don't wish to be bothered with physical anyway. I'm guessing but I'd say the spreads are wider and there is less liquidity because it's relatively new.

If the WS Contract was introduced recently then we would want to go out say to next year to see if the Open Interest on the two contracts is closer. If that cannot be determined then if volumes are similar.

Seems like it's just that the WS contract is new. Spreads will close up once arbs start to nickel and dime the American contract versus the European.
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