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Strategies & Market Trends : Expirationless Options (XPOs)- The Next Big Thing -- Ignore unavailable to you. Want to Upgrade?

To: Tech Master who wrote (14)	7/8/2005 11:44:05 AM
From: Win-Lose-Draw	Read Replies (1) \| Respond to of 60

XPOs will always trade at a fraction of the cost of the underlying asset (I'd guess around 50%) There is nothing to guess - right around 55% is where other markets using perpetuals have converged to. And that is precisely the point - because the XPO is pegged to the price of the underlying, your profit/loss is strictly 1:1 with the underlying. No P/L advantage to holding the XPO, and the price discount reflects the increased risk of holding the XPO relative to holding the underlying (plus some other nigglies.)