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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe -- Ignore unavailable to you. Want to Upgrade?

To: Dan Duchardt who wrote (710)	12/7/2002 10:29:15 PM
From: jt101	Respond to of 1064

As you suggest, it is a good idea to buy protective calls IF ES dips sub 900, instead of rolling up puts for a higher strike price. But only if I get a chance... I am/was more concerned with ES taking off on me, than the other way round. My current plan is to close the trade in its entirety by third Friday morning, or before, and start fresh again. I am not thinking of rolling out to a later month as of now... ------------------------------------------------- Some info about ES futures/options settlement : I looked at IB about future closeout and this is what it says, basically it doesn't say much... <<For futures contracts that are not settled in cash but are settled by actual physical delivery of the underlying commodity (including those foreign currency contracts that call for actual delivery of the physical currency), Customers may not make or receive delivery of the underlying commodity. For such futures contracts not settled in cash, Customers agree to roll forward or close-out any position by offset three (3) business days prior to the exchange-specified last trading date for the contract or three business days prior to the first notice day, whichever comes first (the "Close-Out Deadline"). It is Customer's responsibility to make itself aware of the last trading date for such contracts and the Close-out Deadline. If customer has not closed out any position in a futures contract not settled in cash by the close-out deadline, IB has the right to liquidate customer's position in the expiring contract... I tried to get some info from globex site about settlement, Who wants worthless paper delivery anyway? LOL.... Some info I found on globex website is : <<Index products expiration procedures : Quarterly settlement of S&P 500, E-mini S&P 500 , S&P MidCap 400, S&P 500 BARRA/Growth and Value, and Russell 2000 Index futures and options are based on a Special Opening Quotation of the relevant underlying index. The Special Opening Quotation for each index is based on the opening price of each component stock in that index on expiration Friday.(1) Special Opening Quotations generally differ from the opening index value of each index because all stocks do not open immediately. For example, on typical days surveyed by CME, most S&P stocks open quickly, with around 95% open within 15 minutes and 98% open within 30 minutes. Other indices with larger numbers of stocks may take longer to open.>>> ..... <<Special opening quotation : Special Opening Quotations of the indices generally will be based on the opening values of the component stocks, regardless of when those stocks open on expiration day. However, if a stock does not open on that day, its last sale price will be used in the Special Opening Quotation. The Special Opening Quotation may or may not be within the cash index prices on expiration day. CME disseminates periodic updates of the S&P 500 and S&P MidCap 400 Special Opening Quotations on the ticker as a text message. These quotations are based on the opening prices for those stocks that have opened by that time and the last sale price for those stocks that have yet to open. The Russell 2000 final Special Opening Quotation typically is not received by the Exchange until 4:00 p.m. C.T., due to the large number of stocks. However, a preliminary indication with the percent of stocks open is usually available by 1:00 p.m. C.T. on expiration day. example of opening index calculations A sample calculation of the S&P 500 Index and Special Opening Quotation is shown below. When either (1) all the stocks in the index are open, and corrections are finished, or (2) the close of business occurs, whichever is first, the Special Opening Quotations will be finalized. All open expiring futures and options contracts will be cash-settled to final Special Opening Quotations.(2) >> ...... <<1 The NYSE or AMEX opening price will be used for stocks listed on the NYSE or AMEX, respectively. The first transaction price will be used for Nasdaq stocks. 2 Expiring in-the-money option contracts will be exercised automatically, absent contrary instructions received by the Clearing House prior to 7:00 p.m. on expiration Friday. globex.com And also, q4 How do the quarterly E-mini futures settle and when is the last time to trade before expiration? a4 E-mini quarterly contracts expire at the same time and to the same price as their larger counterpart contracts. For quarterly futures contracts, trading can occur up to 8:30 a.m., Chicago time, on the third Friday of the month. globex.com