Nikkei 225 on SGX - Tick Size?

[L'Apprentice]

Hello fellow traders!

I am trying to understand the Nikkei 225 (Offshore, traded on SGX) contract better. It says on the SGX website that the minimum price fluctuation is:

Outright: 5 index points (¥2500) Strategy Trades : 1 index point (¥500)

Now, I trade the e-minis, 1 tick is 0.25 worth $12.50 and that's the minimum fluctuation. Could any kind soul explain to me what's the difference between "Outright" trades and Strategy Trades in this case?

Attached screenshot of product spec from SGX website

Thanks!

 

[JackRab]

It is exactly what it sounds like... outright is long futures or short futures... Strategy would be a spread... Dec-Mar or whatever...

The outright can only be traded in 5Yen intervals... so 16610 or 16615

The strategies in 1yen.. So Dec-Mar spread could be 50 - 51.

 

[L'Apprentice]

Thanks, JackRab!

I see. Thanks. I am doing straightforward long/short trades. Guess this is good enough for now. But out of curiosity, how would a futures spread result in a tick movement of less than 5 if individual positions move in 5 ticks? Sorry for noob question.

 

[JackRab]

I think you can trade the spread at 1 yen ticks as a strategy trade... so there would be an active market in that spread...

 

[L'Apprentice]

Got it. Thanks again!

 

[learner2007]

Thanks, JackRab!

I see. Thanks. I am doing straightforward long/short trades. Guess this is good enough for now. But out of curiosity, how would a futures spread result in a tick movement of less than 5 if individual positions move in 5 ticks? Sorry for noob question.

As JackRab stated the strategy trade would be used for spreads. It is also used for rollovers.
On the Osaka exchange strategy trades are done separately from trades in the auction market. They are executed as cross trades through a different system and don't appear in the DOM. That's why they can be done in increments of 1 yen. I would imagine that's h ow it's done on SGX too.
I haven't followed Nikkei futures on SGX recently, but the last time I looked the activity was quite low making it hard to trade. You might want to consider trading on OSE. Not only IB, but recently AMP also offers the Nikkei Mini on OSE.

 

[i960]

The spreads just have a "finer" tick increment - typically because they move less. The actual monetary value is the same. This is not specific to SGX and actually pretty common in a lot of markets where the spreads don't have a large ATR.