Trading the ES with the PREM
- Thread starter cee gee
- Start date
Futures have no premium.
Options have. But it's relative with:
- Strike
- Maturity
- Implied Volatility
- Interest Rates ...
That premium is more about Volatility.
So it doesn't tell you to buy or sell.
But you can sell when VIX is low.
Or somethings similar.
Don't get it.
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I thought about that years ago. The calculation of PREM as it appears on the tape isn't 100% current with the market price. It takes a bit of time for the PREM to be displayed... and by then the price has changed so that using PREM seems ineffective.
For intraday trading (and even for daily trading), I've found it's best to calculate Prem on your own, using your own timeframe. Extreme Prems can be, and are being, arbed (futures/cash) with efficient software and/or programming.
I wasted a year of trying to add prem to my style of trading, I gave up, I lost being smart long ago so someone else loves it and can use it a possibility. The only tidbit I ever saw was possible divergences, I thought I saw instances where more or lack of volume gave a clue, but not enough to want to force anything. The traders who have studied the tick well are good at turning points, but that is another indicator where you have to watch it long long time to use it, it is like watching the Dome, just couple instances where you can use bid/ask volumes to your advantage, often times you can't even explain it to yourself, LOL I often think of looking for when price is doing something it not supposed to do, like going to a trend line, will it hold or go through, so watching something other than price can give small hints, but very hard to backtest.
Really. I guess the one I plot is a mirage.
You obviously don't understand how futures are priced. Hint: most of the time - at a premium.
Wow. Super.