Systems, Strategies and Resources for Trading Futures Message Board

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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures

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To: Eagle who wrote (8893)	11/21/1998 3:06:00 PM
From: GROUND ZERO™	Read Replies (3) of 44573

When trading the spoo, that refers to the futures contract. An option on the cash market is just like any other option, with monthly expirations and differing strike prices. There are also options on the futures contracts and they function much the same way. The futures contract itself is a contract and an agreement to take actual delivery of the underlying cash commodity, in this case, delivery of the SP index. If you had a portfolio of the INX, then you would probably want to sell contracts of the spoo to lock in the premium for a guaranteed profit whenever the premium moves above fair value, this is what program trading is about, much like writing a covered call. The speculators like those of us who trade the contracts on speculation are the ones who add liquidity to the market. GZ

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