Futures riskier than stocks?

When you invest in an index - assuming no leverage - you have systematic market risk and diversified unsystemic risk, the risk related to specific companies.

When you invest in a stock, in addition to market risk you also have unsystemic, or firm related risk.

Investing or trading an index is a means of diversifying unsystemic risk.

Leverage in index futures magnifies risk but does not affect it or cause it.
 
again bullshit!!! Most brokers would start liquidating your positions when getting close to margin levels which still leaves a small cushion. Given the index futures trade 24/5 there is a very small chance of a gap >100points (maybe terrorist attack or the like). In any case, a prudent person is not supposed to ever trade in such size to be subject to margin calls in the first place, PLUS a prudent trader would have stop levels in place.

While you are right in theory that you cant lose more than your bet size on a cash position while you could be for more on the hook than just the margin you put up on a short option position or futures position this would rarely ever happen on instruments such as round-the-clock traded index futures.



Quote from increasenow:

maybe I should have stated it this way:
long $5,000 in CASH ONLY(no margin) in SPY
vs.
long $5,000 in FUTURES ONLY in ES...

the SP500 tanks 200 points...there is no debit at all for the SPY position above...you only totally lose the $5,000...as for the ES position...you would lose your $5,000 (100 ES points) and another $5,000 (100ES points) for a total of 200 ES points lost...see my point?
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perfect point made, and fully agree. I think it makes it very clear now.

Quote from intradaybill:

When you invest in an index - assuming no leverage - you have systematic market risk and diversified unsystemic risk, the risk related to specific companies.

When you invest in a stock, in addition to market risk you also have unsystemic, or firm related risk.

Investing or trading an index is a means of diversifying unsystemic risk.

Leverage in index futures magnifies risk but does not affect it or cause it.
More...
 
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