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Strategies & Market Trends : Shorting SPY for fun and profit. -- Ignore unavailable to you. Want to Upgrade?

To: JDinBaltimore who wrote (321)	11/4/1999 11:16:00 AM
From: fut_trade	Read Replies (1) \| Respond to of 346

I look at it like this (I'm no expert though). When there is good/bad news before or after equity market hours -- institutions will buy/sell S&P 500 futures. When the equity markets open there will be a differential between the futures and equity markets. A profit can then be made, for example, by borrowing money to buy stocks in the S&P 500 and at the same time selling the futures. The institution would then hold the stocks until the futures expire thereby locking in a gain. Thus if the futures are up a lot at the market open, there will be buying pressure on the stocks in the S&P 500 until the differential between the futures and equity markets is removed, that is, the cost of borrowing money to buy stocks is about equal to the difference between the futures price and the cash value of the S&P 500. I see the opening premium as a very short term indicator.

To: JDinBaltimore who wrote (321)	2/2/2000 5:27:00 PM
From: fut_trade	Read Replies (1) \| Respond to of 346

JDB, are you still looking into the premium indicator prem.x from quote.com? I have looked at it in detail. It's just the the price of the future minus the SPX. However, I think their SPX price is slightly incorrect at times compared to other sources. They also have a premium quote for the e-mini -- eprem.x. It has nothing to do with fair value. The fair values of the MAR00 future minus the SPX for the last two days are 8.14 and 7.71 (from cnnfn.com). Thus going long the SPX future costs a bit, while going short pays you that interest. I wouldn't use prem.x as a short term indicator; although you may have good success with it. I plan to trade the SPX futures about 1 to 4 times Round Trip every two weeks using a carefully optimized timing signal.