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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: JDinBaltimore who wrote (30654)	2/4/2000 6:32:00 PM
From: GROUND ZERO™	Read Replies (1) \| Respond to of 50167

Howdy John, I didn't watch today's action, so I missed it... but, no, I've not heard of such a phenomenon as being anything unusual... my best guess about such an anomaly would suggest that the futures traders were caught in the wrong direction, if anything... but I honestly wouldn't make much of it... hopefully Ike can recall the earlier incident and post his impressions of this..... My Best... GZ

To: JDinBaltimore who wrote (30654)	2/7/2000 10:26:00 AM
From: IQBAL LATIF	Read Replies (3) \| Respond to of 50167

<<Howdy, I was curious about the futures and cash playing opposite roles today - cash leading futures. I had never remembered seeing this. >> When futures trade at a discount to cash, it is a trading anomaly. Sign of trouble, this gets corrected fast if not it heralds a big steep drop. More often than not it creates an arbitrage opportunity, the big traders sell futures in a fast market to hedge their cash holdings that is why in a normal market it trades at a premium, the premium reduces as the time of expiry approaches. The disappearance of premium of 9 points last Friday may have been caused by traders trying to incite cash selling, futures as we all know is an index trade and it is a fast reaction to news but if cash selling does not follow with the futures fall the chances are that cash or individual selling of stocks is not materializing. The pits are trying to break the supports but the individual underlying stocks which form the index are not following the futures. The moment futures turn into a discount to cash, the traders have opportunity to buy futures and sell cash taking advantage of an arbitrage. This does not last long and always resolve, the question is that of perception of a situation, the big holders of equity and pits traders can have a difference of opinion like Gold price push up or bond anomaly could have driven that opportunity on Friday.. That is my understanding of this discount of futures v/s cash.. fwiw.. I hope I have explained to to your satisfaction.. This i have learnt it from market and I will very honest I have not a faintest of idea about backardisation I would not be able to explain that, for me these anmolies have market expressions I learnt it that way.. For a tip of the day for myself I think VOD was sold as managers went into two way trades and got into Mannesmann, as I know VOD Air touch was 7% of FTSE now the new company would be 14% of FTSE, this is not generally realised that new company in couple of weeks would require a substantial following by those index trackers who want a full exposure to FTSE, for me VOD is an opportunity here like Yhoo preentry into S7P.. fwiw..