SPY options vs index futures

[kxvid]

Advantages:
SPY options have tighter spreads than the ES
Very, very good liquidity
Commissions much cheaper than index futures if you use a flat rate broker

Disadvantages:
Not tax advantaged like futures
Subject to time decay
Much more subject to tracking error than futures due to increases/decreases in volatility


I used to think futures where the end all. But after a second look SPY options might be a better choice for my purposes.

 

[short&naked]

SPY options are tighter than ES? No way...

SPY options couldn't be more liquid than ES. Heck, even SPY itself isn't more liquid than ES, or?

 

[just21]

Margining is better on ES.

 

[short&naked]

Quote from kxvid:

Advantages:
SPY options have tighter spreads than the ES
Very, very good liquidity
Commissions much cheaper than index futures if you use a flat rate broker

Disadvantages:
Not tax advantaged like futures
Subject to time decay
Much more subject to tracking error than futures due to increases/decreases in volatility


I used to think futures where the end all. But after a second look SPY options might be a better choice for my purposes.

I also doubt that long term options on SPY have tigher spreads than ES. It also depends on whether they are in or out of the money, etc.

 

[kxvid]

Quote from short&naked:

SPY options are tighter than ES? No way...

SPY options couldn't be more liquid than ES. Heck, even SPY itself isn't more liquid than ES, or?

Yes they are tighter than the ES. Check out the liquidity of ATM front month SPY options. I think you'll be impressed. The ES is just a dot on the map compared to the SPY option chain.

 

[short&naked]

Quote from kxvid:

Yes they are tighter than the ES. Check out the liquidity of ATM front month SPY options. I think you'll be impressed.

But that is my point. How about ITM that are a few months out. If you wish to use them for anything but day-trading, forget it.

 

[nazzdack]

Quote from kxvid:
The ES is just a dot on the map compared to the SPY option chain.

1)Yah, a dot the size of Texas and Brazil put together.
2) The 1-tick spread in ES is ~ 0.024% (0.25/1025)
3) A 1-penny spread in a $2 SPY-option is ~0.50%. The penny is "arithmetically small" but "geometrically enormous" compared to the ES......0.50/0.024=20.8!! :eek:
4) Try not to get hung up on "information overload" with all of the different SPY option months, strike prices, LEAPS, regular options for every put & call et al.

 

[ramaTrade]

What are you guys talking about ? Are you comparing ES futures with SPY options ? You need compare options on ES with SPY options. In this case, SPY options' spread is still a little better even after you consider their contract size. Remember ES is 5 times of SPY.


It is easier to evaluate SPY options strategy using the Options Lab ( http://www.TheOptionsLab.com ) because the ticker is ready.

 

[falconview]

How many options in a SPY contract?

 

[brokenmarkets]

options have 'limited loss' and 'unlimited profits'.

futures have 'unlimited losses' and 'limited profits'.

Quote from kxvid:

Advantages:
SPY options have tighter spreads than the ES
Very, very good liquidity
Commissions much cheaper than index futures if you use a flat rate broker

Disadvantages:
Not tax advantaged like futures
Subject to time decay
Much more subject to tracking error than futures due to increases/decreases in volatility


I used to think futures where the end all. But after a second look SPY options might be a better choice for my purposes.