Thinking about the futures

I

insaneinvestor

What is the difference between the ER2 and options on the RUT?

Is it more profitable to trade the ER2?

How similar are futures to options?

Is there a quick crash course I could read over?

Thanks!
 
Quote from insaneinvestor:
How similar are futures to options?
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Not much of a self-starter, are you? Did you even try to find the answer for yourself before asking to be spoonfed?

Quote from insaneinvestor:
Is there a quick crash course I could read over?
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Try google.
 
Quote from GTS:

Not much of a self-starter, are you? Did you even try to find the answer for yourself before asking to be spoonfed?

Try google.
More...

Actually yeah, I did!

I can't see the ER2 chart (until my account gets upgraded) so I can't figure it out for myself and wanted to get a jump start.

I know nothing about futures and goog has a bunch of blogs from people I don't know - kinda like this one... but nothing that looked of real value.

I will keep looking and have faith in ET that someone will come along here and actually be helpful to someone who wants to learn something new.

I find it very useful to ask people who actually do what I want to do about the topic in addition to self education.

Maybe I didn't ask the question right, or maybe you just don't understand it.

I know a lot of people here are bitter and un-successful so I do expect a certain amount of rubbish replies.

Personally I find it rewarding to answer questions when I can no matter how basic they seem, or even post a link to information I found useful in my travels.

:D
 
Quote from insaneinvestor:

Actually yeah, I did!

I can't see the ER2 chart (until my account gets upgraded) so I can't figure it out for myself and wanted to get a jump start.

I know nothing about futures and goog has a bunch of blogs from people I don't know - kinda like this one... but nothing that looked of real value.
...
Maybe I didn't ask the question right, or maybe you just don't understand it.
More...
So you understand how options work but you dont understand futures? What don't you understand?

I don't get the part about needing to see a chart to learn about it but CME's site has delayed charts, check it out (lots of good stuff about emini futures there too)
http://chartsrdc.cme.com:443/cs/chartList.jsp
 
Thanks dude.

I hear that futures are not the same as options so I am trying to figure out how.

Actually, I should have said I wanted to see the chain of futures (if there is one).

I want to see how futures move in relation to options.

The main question is do the futures move more than options? I am looking for short term trades.

When I buy options they hold their value but they don't go up in value much at all.

So, I am looking for maybe a little more leverage and movement.

Am I on the right track?
 
Quote from insaneinvestor:

Thanks dude.

I hear that futures are not the same as options so I am trying to figure out how.

Actually, I should have said I wanted to see the chain of futures (if there is one).

I want to see how futures move in relation to options.

The main question is do the futures move more than options? I am looking for short term trades.

When I buy options they hold their value but they don't go up in value much at all.

So, I am looking for maybe a little more leverage and movement.

Am I on the right track?
More...
With futures there is no chain - there is no strike price. Futures have a settlement date but for short-term traders its of little consequence (most traders are on to the next contract before the settlement date, there is a period where both contracts overlap)

Lets say you buy 1 ER2 contract @ 780 (approx the current price), if it moves up 1 pt (10 ticks) and you sell you just made $100 minus commissions. Basically its a straight way to trade the cash indices, there are no BS formulas, no greeks, no ITM/OTM.

For every pt ER2 moves in your favor you make $100, for every point it moves against you you lose $100. Its that straightforward and simple.

In terms of leverage, you can look at the contract required "margins" by your broker to determine how much cash you need for each ER2 contract you want to hold. Look at the daily range on the ER2 charts to see how much the contract moves (remember $100 per pt or $10 per tick for ER2) Today has had about a 10 pt range on the ER2, that's $1000 per contract, so if your broker requires $2000 per ER2 contract you can see how much leverage you have.

Note that futures and their related cash indices do not move in perfect lockstep but futures do convergence to the cash value. You can read more about the differences between futures and cash index (premium) online.
 
Here is where I am stuck now.

Futures seem very str8 forward. Here is the contract, this is the price, take it or leave it.

However, how can you spread something like that if there is no chain? I found a virtual account but does not give you the option to spread.

Lets take ER2 for example. I can buy the Sept contract (just for the sake of learning) for 777.30 (current ask) and then what, as the RUT goes up or down, so the contract?

It seems to not go along with the farmer selling buckets of corn for $X and then the price moves.

Hope I don't sound like a fool, but whatever, I want to learn here.

INvestopedia explains the basics but I think I would have a better time understanding it with a RUT example.

As always, thanks for the info.
 
Just start buying and selling ER2 using various month's contracts. You'll get the hang of it soon enough.

Better yet, get your feet wet with a little NG. Nothing like Natty to learn ya a few things. :D
 
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