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: Tom Trader who wrote (30462)	12/5/1997 11:44:00 AM
From: ViperChick Secret Agent 006.9	Read Replies (1) \| Respond to of 58727

TT.... still in my calls..... actually I was relatively calm for me...by this time in my trading cycle...I sort of just shrug my shoulders and say.."darn (oops I have to edit that so I dont go to jail)...here we go again... I guess no one gets any Christmas presents this year...." I mean Kevin has gotten some pretty expletive emails from me when the market has tanked...if I was not in puts....but this time around, he didnt get any...so he can vouch for what I am saying.. ...of course I have the potential to turn into OJ at any time... Coffee in bed?! wow..I wish I had someone to serve me in bed..... ps...obviously we are decoupled from the bonds...how do you trade then when you get a sell signal on the bonds.

To: Tom Trader who wrote (30462)	12/5/1997 12:00:00 PM
From: Kevin	Read Replies (1) \| Respond to of 58727

>>>Believe it or not, I actually thought about you as I lay in bed <<< Damn Tom. You might wanna go private with this type of talk, so you don't give OJ a stroke!

To: Tom Trader who wrote (30462)	12/5/1997 12:21:00 PM
From: Esteban	Read Replies (1) \| Respond to of 58727

Tom, Would you mind answering a lingering question I've had about futures trading that will no doubt underline my ignorance of the subject? It has to do with the fair value concept. I already understand that fair value is based on the interest that would be paid on margin till the expiration date, etc. and that on the contract expiration date the futures contract is valued the same as cash. The practical effect of this seems to me to be different depending on whether your position is long or short, and this is where I get confused. Consider a hypothetical example where I buy one contract and at the same time sell one contract of spz on the date that it becomes the near contract, with the intention of holding both of them to expiration, at which time I convert to cash. Say the fill price is at fair value of 10. Now assume that the market is in a trading range for the entire time and by some wierd coincidence when the contract expires, the underlying cash market is at the exact same level as the day I bought and sold the 2 contracts, or 10 points below the original fill price at the now fair value spread of 0. It appears to me that I have lost 10 points on the long position, and gained 10 points on the short position for a net of zero. It seems to me that this scenario favors the short postion in a flat market. This is the point I don't understand, because it would be too easy to go short futures and long cash on every contract and pocket the difference on expiration. Maybe there's not enough difference to make the venture worthwhile, but from an academic point of view it would seem there is a bearish bias to the futures market. Am I thinking correctly on this subject? Esteban