Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: MonsieurGonzo who wrote (28662)	11/17/1997 8:27:00 PM
From: j g cordes	Read Replies (1) \| Respond to of 58727

MonsieurGonzo... futures generally refer to a futures contract, which is a contract for a standard amount of a commodity (wheat, soy, oil, stock, interest bearing notes) and includes a settlement date. Settlement dates run into the 'future' months, therefore the name. They originated as a way to let cylical agricultural producers and end users buy and sell up to the time of delivery of their products instead of doing only when the harvest was in or the pigs brought to slaughter. There is leverage in trading futures, set as a constant contract multiple per commodity. Remember that a futures contract is an agreement to receive the goods themselves whereas an option is simply a declining time premium over and above the strike price for the right to buy or sell up to a specific date (no product is involved). Therefore futures, by nature, will lead current market price action as they try to divine and arrive at future demand/supply settlement costs, higher or lower. Futures "derive" their value from the underlying commodity, hence they're called derivatives. I'm sure I missed or erred on some of this, but perhaps this helps. There are many great resources on the internet which both trace the history of this business and current thought on trading them. Paper trade first until you are comfortable, then use discretionary money because its a tough way to invest and an easy way to gamble. Jim

To: MonsieurGonzo who wrote (28662)	11/18/1997 9:54:00 AM
From: Tom Trader	Read Replies (3) \| Respond to of 58727

Hi Steve--sorry I did not get back with you right away Jim has given you some information on futures. >>TT; RE:"I will go flat the S&P futures when/if it gets to 958+..." The system that I use to trade the S&P futures goes flat when I have a profit of 40 points -- just the way the system works---the precise point to go flat ie whether it should be 40 points or 35 or 50, is a function of where the futures are at. In other words, if the futures were trading at 500 or 1000, the profit that I would seek before I go flat would go down or up accordingly. >>Tom, does go flat mean that you "close" (the current CALL) position<< Going flat--means that I close out my current long position in the futures--and at that point I have no position in that instrument. When trading futures directly, one is not trading puts or calls -- now it is possible to trade the SPX options--which uses the same underlying index--but that is not what I am doing. >>or, "hedge" a position with offsetting PUTs ? Please forgive my ignorance - I am new to OEX options trading<< Nothing to do with puts or any other options--it is not hedging either--it merely means that I don't have a position in the S&P futures and so no matter what happens thereafter, I am not impacted -- until I take my next position. >>Being so new to OEX CALLS/PUTS, perhaps what I don't understand is their relationship to "futures", as I have no experience with that whatsoever!<< As I said, it has nothing to do with options and it has even less to do with the OEX which is based on a different index than what the S&P500futures are based--where the underlying index is the SPX. May be you got confused because in the same posting that I went long the futures, I think that I also said that I went long OEX calls and closed out OEX puts that I had. Hope this clarifies matters.