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In a message dated 7/4/01 11:47:35 AM Central Daylight Time,
MikeSuesserott@xxxxxxxxxxx writes:
<<
My first question would be, why would you *want* to trade index futures in
the first place? To make money, go where the liquidity is. It is true that
most options on futures-based indices are not as liquid as, say, the OEX. If
your purpose is speculation as opposed to hedging a portfolio of stocks, why
be married to the S&P? >>
***** Why would anyone *want* to trade index futures in the first place?
Simply because the Globex2 emini S&P and emini Nasdaq are the most level
playing field around. They have larger and larger volume and liquidity all
the time, record breaking actually. The exchange member and the public
trader both have the same ability to participate in trades at any price.
That is not true in anything that is pit traded, it is not a level playing
field.
*****Some of the finest 2nd generation trading platforms available are geared
for trading just those markets. Only secondarily are these firms (Trading
Technologies, PATS Systems, YesTrader, etc.) building functionality to trade
options.
***** Futures are easier to understand than options. Futures are plain
vanilla in terms of complexity to trade. Options are more complicated,
perhaps rainbow sherbet, if you will.
****** Options are a tremendous tool and I trade a lot of them. I have
clients who trade them and use all different kinds of strategies to take
advantage of their multi-facets. They are tremendously appealing as a
limited risk hedging tool. Their flexibility for the hedger and the
speculator is appealing to a large audience.
****** I think futures and options need to be applied as a tool. Picking the
right tool is not always easy, though it is important. Different trading
situations demand different tools and applications of those tools. To me
there is no one right tool to use. It depends on the situation and the skill
of the craftsman using the tool.
Regards,
John J. Lothian
Disclosure: Futures trading involves financial risk, lots of it! John J.
Lothian is the President of the Electronic Trading Division of The Price
Futures Group, Inc., an Introducing Broker.
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