Various uses of E MICRO futures!

[traderjo]

Apart from the following are there any other uses of the new E micro futures ( specially the MES)
- Outright swing trading / testing waters
- Pairs trading with other Index or other futures
- Temp hedge to ES long term position
- Delta hedging ES soled option or soled option spreads
- Delta hedging SPY soled Option? or soled option spreads

Is there any good education material on delta hedging option one can suggest ? a blog a video etc

 

[Robert Morse]

"Temp hedge to ES long term position?"

Can you explain this one? Options would be a hedge. Selling MES vs ES is just closing the positions. Why not just sell out the ES? Remember, to most Futures traders, a 1 lot of ES is not a big position. I do not see traders selling 5 MES to get a 1/2 positions when they are concerned they are wrong.

MES is a good alternative to SPY but not to ES.

 

[Overnight]

... Selling MES vs ES is just closing the positions. Why not just sell out the ES? Remember, to most Futures traders, a 1 lot of ES is not a big position. I do not see traders selling 5 MES to get a 1/2 positions when they are concerned they are wrong.

MES is a good alternative to SPY but not to ES.

I see something here, because now one could do a same contract month hedge in stand-alone futures without breaking any rules. It's complicated, and is totally mechanical.

Still working on the idea.

 

[traderjo]

Hi Robert...
Perhaps not cost effective ..what I meant is if you are long/short ES for long term trade and in profit and then you think there is going to be a temp down or upturn then you could use few MES to capture that !

 

[Robert Morse]

now one could do a same contract month hedge in stand-alone futures without breaking any rules.

This has been in a number of threads. It serves no purpose to have a boxed position in futures even if the CME allowed it.

 

[Overnight]

This has been in a number of threads. It serves no purpose to have a boxed position in futures even if the CME allowed it.

The question is, why do they? It must serve a purpose?

 

[Robert Morse]

Hi Robert...
Perhaps not cost effective ..what I meant is if you are long/short ES for long term trade and in profit and then you think there is going to be a temp down or upturn then you could use few MES to capture that !

There are no long term Cap Gains in 1256 contacts in the US, so you might as well close or hedge with options if you fear a short term change in the market.

 

[Robert Morse]

It must serve a purpose?

A long/short position in the same future, no. Not in the US with our tax laws, serves NO purpose. There might be other countries where taxes have a loophole but since the CME does not allow it, that is that.

 

[Overnight]

A long/short position in the same future, no. Not in the US with our tax laws, serves NO purpose. There might be other countries where taxes have a loophole but since the CME does not allow it, that is that.

But the CME has nothing to do with IRS tax law?

Robert why does my broker show this on my statement?

Here were two open positions, offset.

16K margin required for the maintenance, whatever...

Then why do they do this?

That was from the statement that day.

What is the point of it, if it means nothing to US traders?

I do not understand.

 

[MattZ]

The CME does not allow to hold long and short on the same month. You are holding different months.
Tax and net/net position are separate issues.