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Strategies & Market Trends : The Art of Investing
PICK 50.39+1.1%Dec 11 4:00 PM EST
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To: Daniel Chisholm who wrote (94)9/11/1998 11:14:00 PM
From: Cymeed  Read Replies (1) of 10694
 
Daniel, great post re Yen future trading.

I have one question. Since you seem to be very familiar with future tradings, what is your take of current market down turn to the "big boys" who hold a lot of future contracts ? A lot of people might have already busted in the future's trading, thus why the rumor today that Lehman went bankrupt. Do you see further contract closing down, margin call, or belly up by those future tradders in the horizon that might affect stock price ?

I know for a fact that all the index and big caps are actually controlled by future trading, like Dow, SP500, and Nasdaq 100. The stock price is not controlled by stock traders. But future price is closely related to stock price because of these buy-sell programs based on the premiums between stock and future price. Big banks and security houses are the managers of those contracts, who make money by collecting fees and margin interest from the traders. But those banks and security houses make big loans to the traders too.

If the future people decide to further close their long accounts and potentially turn short, what would be the impact to the market in the near future ? Since they use much more margin than stock traders, this is making the bubble really inflated and the market much more venerable.

Your opinion ?
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