You could...
A. Short 10 MES contracts of same month
B. Short ES in the forward contract.
Are you serious?
- Thread starter R33C0
- Start date
You could...
A. Short 10 MES contracts of same month
B. Short ES in the forward contract.
Not the same instrument. I don't want to trade MES.
Then you're stuck with option B for same account.
I don't trade futures. But I know just enough to be dangerous.
Long ES and short 10 MES in the same account is permissible because legally they are two different contracts.
Same goes for current month and the back month. They are two different instruments.
Robert Morse said it is a violation of the CME rules to be long in one account and short in another account when it is exactly the same contract.
By the book.
"Rule 534 Wash Trades Prohibited
No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales)...
...Pursuant to an offer of settlement in which Jeffrey Soberman Parket neither admitted nor denied the rule violation or factual findings upon which the penalty is based, on May 17, 2023, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on multiple dates from January 31, 2020, through December 21, 2020, Parket entered buy and sell orders in the same products and expiration months, where he reasonably should have known that the entry of the orders would not result in a bona fide market position exposed to market risk in E-Mini S&P Weekly and End-of-Month options on futures. The Panel concluded that Parket violated CME Rule 534.
...In accordance with the settlement offer, the Panel ordered Parket to: 1) pay a $25,000 fine; and 2) serve a 10-business-day suspension from access to any trading floor owned or controlled by CME Group and from direct and indirect access to any designated contract market, derivatives clearing organization, or swap execution facility owned or controlled by CME Group. The suspension shall begin on the effective date below and continue for 10-business-days after the fine is paid in full."
https://www.cmegroup.com/notices/disciplinary/2023/05/CME-21-1490-BC-JEFFREY-SOBERMAN-PARKET.html
I'm not a futures trader, it's been years since I attemped day trading ES.Offsetting trades allow you to see in to the markets when you're not looking, try it overnight, it's fascinating, I can make a newbie student out-trade anyone here instantly, I was generating 50% per quarter seeding a new fund doing exactly this, so much simpler when you're generating marginal returns
Offsetting positions means that you are breakeven until you close one of them, less commissions and slippage. Is that correct?
At what point do you close one of the positions?
What has to happen to get you to close one of the positions?
Once you close one of the positions the other is an unhedged open position? Is that correct?
So you now have an open position that you have paid 3 commissions on. One to open the position and 2 more to open and close the hedge. (there is also slippage to consider)
Would it not be better to watch the market with no position until whatever has to happen to get you to close the hedge happens and then open an unhedged position?
Obviously a clarification is needed. Yes, you can trade the back months, not just for the next quarterly but even further out. However, you're looking at very thin volume, and as such, the spread would be insanely wide. So going back to the initial discussion about "offsetting" the same trade using the back month, it just wouldn't make sense (at least for me).
Actually, ESM3 (June contract) and ESU3 (September contract) are one and the same instrument. You're just opening two different positions. But as I've stated previously, unless you're trading the last 2 weeks before the contract rolls over, when both contracts are actively traded, it wouldn't make much sense to trade the back month due to wide spread.
Set Parket is a frauster aside, probably my neighbour next door.
How the orders would not result in a bona fide market position exposed to market risk? Risks are double when positions were opened and not offsetting immediately, hence the exposures. I'd love to see the exhibits and trade logs.