E-Micro option stupidness.

Status
Not open for further replies.
Overnight

Overnight

As most regular members here know, I hate options. I just don't understand why they don't work in my head.

And it was reinforced a few days ago when a user here showed me the difference between the E-mini and E-micro index option costs, on a options tables/list/whatever.

The issue came down to a basic conflict in my head. It makes NO SENSE.

As I saw on his screen, the NQ e-mini call option at a 11700 strike price at middle of December was 700 bux or so, to buy it.

The MNQ e-micro call option at a 11700 strike price at middle of December was also 700 bux or so, to buy it.

The max gain/loss was different by 10 times, since it was one 10th the size. I get that, and is what I would expect.

But why the hell did the options cost the exact same?

Why would the micro option not cost 1/10th the cost of the e-mini option?

E-mini call option cost 700 bux? Then the E-micro call option should cost 70 bux. After all...If your reward to risk ratio is 10 times smaller on the thing, so should the cost of getting into the trade to begin with.

Anyone?

Big thumbs-down on it, as given here by my man Will Ferrel!

 
The multiplier is different. The $700 cost needs to be multiplied by the multiplier.
For example for stocks the multiplier is usually 100, so a $1 option costs $100.

I don't trade NQ/MNQ options (yet), but just checked the multiplier:
For NQ the multiplier seems to be 20, so a $1 option costs $20. ($700 option = $14000)
For MNQ the multiplier seems to be 2, so a $1 option costs $2. ($700 option = $1400)

NQ:
https://www.barchart.com/futures/quotes/NQ*0/options
upload_2020-10-3_21-35-58.png


MNQ:
https://www.generictrade.com/trade-the-micro-e-mini-nq-100/
upload_2020-10-3_21-37-27.png
 
Last edited:
you win the internet

16,000 posts and he couldnt figure that out ? paper trader maybe , never bought an option in his life

spends all his time posting here, bothering real traders
 
@Overnight Actually they must be quoted equally, otherwise, people will arbitrage them out.

Any option is quoted the same as it's underlying. Stock Options are quoted in $$/share, just like the underlying stock (Which is quoted as $$/share). NQ and MNQ options are quoted just like the underlying NQ and MNQ future is quoted, in index points.

The NQ option represents 1 NQ future contract, hence the option multiplier itself is 1, however, because the NQ future contract has a multiplier of 20 (20x the index value), the option inherits this multiplier as well.

NQ Future options gets quoted in index points, e.g. 700 pts. Monetary value of such an option would be 700 x 1 x 20 = $14,000 as guru mentioned in his post.

The MNQ option is also having a multiplier of 1, but the MNQ future itself is scaled down to a multiplier of 2.

Since both options in reality have a multiplier of 1, there is no reason why they should be quoted at different index pts values.

If however, it happens that MNQ options would say have a multiplier of 2 (Instead of 1), i.e. each option represents 2 MNQ future contracts, then it's now a different story. Such an option must be quoted at 350 pts (as opposed to 700).
 
Identical to futures.

NQ and MNQ also quote at the same price, though MNQ is 10x smaller ($20 per point vs $2 per point).

In options is identical. Same price, but MNQ options are also 10x smaller.
 
Overnight-You are comparing the ES with Micro and wondering why trade the smaller contract. I agree with that simple example that the ES is better but some have very small accounts and the risk or margin for the mini is too much. And when you compare the margin required to trade both ES and ES micro options vs the SPY, I think you will find the target market. You can avoid the PDT rule, have longer trading hours, have risk-based margin, and for US-based accounts a better tax rate for profits.

Overnight said:
And it was reinforced a few days ago when a user here showed me the difference between the E-mini and E-micro index option costs, on a options tables/list/whatever.
More...
 
Overnight said:
As most regular members here know, I hate options. I just don't understand why they don't work in my head.

And it was reinforced a few days ago when a user here showed me the difference between the E-mini and E-micro index option costs, on a options tables/list/whatever.

The issue came down to a basic conflict in my head. It makes NO SENSE.

As I saw on his screen, the NQ e-mini call option at a 11700 strike price at middle of December was 700 bux or so, to buy it.

The MNQ e-micro call option at a 11700 strike price at middle of December was also 700 bux or so, to buy it.

The max gain/loss was different by 10 times, since it was one 10th the size. I get that, and is what I would expect.

But why the hell did the options cost the exact same?

Why would the micro option not cost 1/10th the cost of the e-mini option?

E-mini call option cost 700 bux? Then the E-micro call option should cost 70 bux. After all...If your reward to risk ratio is 10 times smaller on the thing, so should the cost of getting into the trade to begin with.

Anyone?

Big thumbs-down on it, as given here by my man Will Ferrel!

More...
Options are amazing! Once you understand them, you’ll realize they are much more forgiving than stocks and futures. I should take you under my wing, kid, and teach you a few things!
 
Overnight said:
As most regular members here know, I hate options. I just don't understand why they don't work in my head.

And it was reinforced a few days ago when a user here showed me the difference between the E-mini and E-micro index option costs, on a options tables/list/whatever.

The issue came down to a basic conflict in my head. It makes NO SENSE.

As I saw on his screen, the NQ e-mini call option at a 11700 strike price at middle of December was 700 bux or so, to buy it.

The MNQ e-micro call option at a 11700 strike price at middle of December was also 700 bux or so, to buy it.

The max gain/loss was different by 10 times, since it was one 10th the size. I get that, and is what I would expect.

But why the hell did the options cost the exact same?

Why would the micro option not cost 1/10th the cost of the e-mini option?

E-mini call option cost 700 bux? Then the E-micro call option should cost 70 bux. After all...If your reward to risk ratio is 10 times smaller on the thing, so should the cost of getting into the trade to begin with.

Anyone?

Big thumbs-down on it, as given here by my man Will Ferrel!

More...


aren’t options always quoted per one underlying unit? here underlying is the same index hence the same price. they have different multipliers bc of the two different futures contracts involved.

plain index options on the same underlying index with different multipliers would be quoted at the same price.
 
Overnight said:
As most regular members here know, I hate options.
More...

lol.


Overnight said:
But why the hell did the options cost the exact same?

Why would the micro option not cost 1/10th the cost of the e-mini option?
More...

Cost isn't the same. Your option price is per contract. And mini contract dollar value is 10x bigger than micro contract.

Here's what i do when somethings seems completely off or it seems that i've found a trilllion dollar arbitrage holy grail - I just trade my conviction. Market will surely prove me otherwise.

And that's where the "oooh - that's why i got fcked" moments kick in.

"trial and error" approaches and the subsequent lessons are awesome :)
 
Last edited:
Status
Not open for further replies.
Back
Top