CME risk dept. confirmed...No wash on micro hedges.

[Overnight]

Spoke with them today. They confirmed that a long in one position and a short in another in same contract month across the two sizes is not considered a wash trade, and is allowed.

So for example, you can be long in Jun NQ, and short in Jun MNQ, without breaking any rules.

I can see this being advantageous for some folks, as it opens up a wide-world of hedging opportunities.

The only caveat is that there is currently no intra-month margin discount yet, since they are technically two different instruments. But the CME rep said there is a chance that will be introduced in the near-future.

 

[nillionaire]

There is no such thing as a wash sale for futures.

 

[EsKiller]

Why the hell would u wanna put that trade on in the first place ? Wanna hedge ? That’s what options are for

 

[Overnight]

There is no such thing as a wash sale for futures.

Jesus, sorry, I corrected it for you, to mean "wash TRADE".



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 trades or wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

 

[Overnight]

Why the hell would u wanna put that trade on in the first place ? Wanna hedge ? That’s what options are for

Excellent question! If nobody does it and it is not a good hedging strat, then why does this even exist in the first place?

The fuk do I know? I guess I must do options, that is the only solution ever.

 

[tiddlywinks]

For one... such a position can be used to intraday-trade around a core swing position.

 

[Overnight]

For one... such a position can be used to intraday-trade around a core swing position.

OMG, someone gets it!

 

[destriero]

Say you're short a synthetic straddle in ES and you want to flatten. It makes sense to use Micros with a position in the bigs under say, 4-5 lots.

 

[Overnight]

Say you're short a synthetic straddle in ES and you want to flatten. It makes sense to use Micros with a position in the bigs under say, 4-5 lots.

Wow, two people get it! (I knew des would). Anyone ELSE out there want to stab at the micros and poopoo them? Anyone else out there wonder why these shitty little micro contracts have so much volume? People are working them, dudes! So work with them, don't shit upon them, until you try them. Oi!

 

[laila]

Let's assume you're short a manufactured straddle in ES and you need to straighten. It bodes well to utilize Micros with a situation in the bigs under state, 4-5 parcels.