S&P Pit Traded Futures and Options Questions

Quote from Futuresnut:

As an aside question related to the "pit" topic, I've been trying to figure out how to emulate pit-traded SP500 contracts with brokers who don't offer them (like IB). Couldn't a person control two separate accounts and keep the ES contracts separate? Say in one account I went long 5 ES for a position trade (emulates one large SP500) and during a bull-run fade by shorting ES retracements in the other account? That way I'm not having to reestablish the long position incurring the extra commissions. Also this approach keeps both sides of the trade tracking tick-for-tick rather than an elastic spread using another proxy like SPY.

Would brokers allow this?
:confused:
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I don't understand the point of being long 5 ES in one account and short 5 ES in another. Why pay the cost of double margin?

The pit traded are not fungible with the minis (ie. you can't purchase 5 ES to offset a short SPX position). However, they can be used to offset the risk and thus margin requirement. In that case, it would make sense to offer them in the same account.
 
Now as a "HEDGE" you could do this.

Say you are short the ES and Globex goes down but the pit still trades. This is not a pipedream, it happens. So what do you do?

If the internet is still up but Globex goes kaput and you are short the ES you can hedge the position by going to CBOT and BUY some Dow futures.......NO sweat about Globex being down, when it comes back up, do your thing...
 
Hedge yes! Here's the intent. A system I want to try calls for trading a primary contract (SP500 pit traded) and hedging adverse moves short term with eminis until an overall market signal calls for reversing the primary. Can't exactly do that with a broker that doesn't provide for trading the pit! (at least for retail accounts)

So, thought what the heck! Open two accounts, use 5 eminis to serve as a proxy for the pit contract and use the other account for the hedging eminis. I don't want the hedge to offset (take off) the primary trade. The Primary may stay in place anywhere from a day to weeks or months. The hedge trades would occur daily or sometimes overnight.

Some benefits would be:
- better/faster execution electronically on the pit proxy account rather than the real pit slippage.
- both primary and hedge sides trade same hours (Globex)
- no worry about spread elasticity between varied instruments; both sides being the same will march tick for tick.

Downside:
- Hassle using two accounts; paperwork, trading, etc.
- two retail accounts wouldn't reflect best risk profile/use of funds (however this may not be an issue with a pro account where multiple accounts are allowed anyway and are viewed with a holistic portfolio risk profile stand point; also thought def alluded to the fact that pro accounts CAN trade pit contracts - but above benefits makes me think why would I?!)

Plan is to test for a while at retail to make sure system works. If it does then will incorp into LLC which would move me to pro account anyway.
 
Quote from def:

The pit traded are not fungible with the minis (ie. you can't purchase 5 ES to offset a short SPX position). However, they can be used to offset the risk and thus margin requirement.
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So assuming you were long "5 ES 1300 oct call options" you could sell "1 SP 1300 oct call option" to offset the risk/margin req?
 
Quote from def:
The pit traded are not fungible with the minis (ie. you can't purchase 5 ES to offset a short SPX position). However, they can be used to offset the risk and thus margin requirement. In that case, it would make sense to offer them in the same account. [/B]
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I remember reading on ET that they are fungible, and I found something on the CME website stating this:

http://www.cme.com/trading/dta/del/...uctFoiType=FUT&ProductVenue=G&ProductType=idx

(read the comments:
<i><b>Additionally, the settlement price displayed on the Daily Bulletin matches that of the full-sized S&P 500 contract for purposes of marking-to-market, as the contracts are fungible, on a 5:1 basis.</b></i>)

Def, are you saying they are not fungible only within IB accounts (maybe because the pit traded accounts are handled differently)? Or is the CME's info wrong? I'm confused....

SSB
 
Quote from SideShowBob:

I remember reading on ET that they are fungible, and I found something on the CME website stating this:

http://www.cme.com/trading/dta/del/...uctFoiType=FUT&ProductVenue=G&ProductType=idx

(read the comments:
<i><b>Additionally, the settlement price displayed on the Daily Bulletin matches that of the full-sized S&P 500 contract for purposes of marking-to-market, as the contracts are fungible, on a 5:1 basis.</b></i>)

Def, are you saying they are not fungible only within IB accounts (maybe because the pit traded accounts are handled differently)? Or is the CME's info wrong? I'm confused....

SSB
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They are not fungible as per CME.
 
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