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 (30496)	12/5/1997 3:56:00 PM
From: Esteban	Read Replies (1) \| Respond to of 58727

Thanks Tom, you answered my question. I don't believe that is the case -- if one sold a contract short and the market did nothing for the next three months thereafter, you'd be right. That's all I was after. And I agree that the futures markets don't have a bearish bias given all of the factors. Just wanted to get clear on this one point. Here's my final point. If SPY tracks SPX over the course of the three month period, theoretically it would be the better long vehicle, and the futures would be the better short vehicle, disregarding other factors such as leverage, transaction costs etc. I know this has not been a very practical discussion, but it has answered a question that has been bugging me for a long time. I've looked for the answer in books on futures trading to no avail. Thanks for going along. Esteban

To: Tom Trader who wrote (30496)	12/6/1997 11:58:00 PM
From: MonsieurGonzo	Read Replies (1) \| Respond to of 58727

TT: RE:" Futures Lingo..." ...I'm not an expert, either, Tom - but I have some experience with the Aluminium futures traded on the LME over here in the EU. When the futures are selling at a discount to present cash value, they call it a backwardation; the other way around is called a contango ( I think I got it right {grin} if not, please correct me, someone ). I've never heard this lingo used outside the London Metals Exchange, but the concept seems universal. Perhaps you can help us all to understand the concept of the SP7Z trading "above" or "below" fair value. Is this value a kind of "perceived" thing by Futures Traders, or something that has a set of rules associated with it ? Then, how is fair value known for other indices, such as the DJX or other, futures : index options organized derivatives ? -Steve