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Why are the Dow Future 100 Points below Cash Market?
- Thread starter BlueStreek
- Start date
Quote from stock_trad3r:
buy all the dips. Futures recovering form this dip because Asian markets are surging. Expect European markets to surge, too. Then the futures will turn green for another big rally tomorrow.
This is my first post back at ET in over 2 months and this guy is still here yelling "Buy Buy Buy"
Quote from zwib:
GM bankruptcy?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUFsRbmQyiJU&refer=home
If GM and Chrysler bankruptcies go down like the government is talking about expect to see 15% U-3 unemployment.
Quote from BlueStreek:
Simply mispriced.
Theoretically this gap is too wide here and presents an arbitrage opportunity for an institution I would think.
Mispriced? Maybe
An arbitrage opportunity for institutions? Nope
Arbitrage by definition means taking advantage of pricing discrepancies. So if you buy the futures now, what do you simultaneously sell to lock in the profit?
Quote from zwib:
GM bankruptcy?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUFsRbmQyiJU&refer=home
I agree, it was only two days ago we saw the pain. Lets not forget when congress did not pass the auto bailout. Markets around the world were crashing --hard-- until Bush said he would bail them out.
I do not agree with these bailouts anymore, because it is no longer a helping hand, they are going to start producing and directing from congress. For my part I was naive in thinking we could accomplish a bailout and the companies would reign in. Anti bailout was the correct choice. But the pain in the markets is clear imo. The market may believe bk would messy and damaging to the entire economy. As a side, I wouldn't short in here knowing this is going to happen, because in 48 hours they may change accounting. But I do believe this is why we are down after hours.
I am too inexperienced to know the intricacies of the cash settlement process and how this can affect the futures. I do know how GM has, every time, I know if it were not for the proposed m2m change I would begin to sell JPM, they bleed hard every time. Now.. no way.
An arbitrage opportunity for institutions? Nope
Arbitrage by definition means taking advantage of pricing discrepancies. So if you buy the futures now, what do you simultaneously sell to lock in the profit?
This gap will be there tomorrow when the market is open, just talking out loud here, but why not buy the futures, and sell the 30 dow stocks until the gap "narrows" as a 30-60 point gap is more normal from my experience, this just seemed like too big a gap that needs to tighten up, and will over the next week, one way or the other, either futures come up to the dow cash, or cash comes down to the futures.
Obviously by the time the june contract ends, rolls over, you cannot have a 100 point difference, so the gap has to close.
Arbitrage by definition means taking advantage of pricing discrepancies. So if you buy the futures now, what do you simultaneously sell to lock in the profit?
This gap will be there tomorrow when the market is open, just talking out loud here, but why not buy the futures, and sell the 30 dow stocks until the gap "narrows" as a 30-60 point gap is more normal from my experience, this just seemed like too big a gap that needs to tighten up, and will over the next week, one way or the other, either futures come up to the dow cash, or cash comes down to the futures.
Obviously by the time the june contract ends, rolls over, you cannot have a 100 point difference, so the gap has to close.
And the 30 Dow stocks won't gap down before you're able to short them?Quote from BlueStreek:
This gap will be there tomorrow when the market is open, just talking out loud here, but why not buy the futures, and sell the 30 dow stocks until the gap "narrows" as a 30-60 point gap is more normal from my experience
Only on ET.
well, this gap was there 30 minutes before the close, a tleast 30 minutes, plenty of time to put on an arbitrage strategy yesterday, software searches for these, I am just trying to determine, if I had large scalability, that buying the futures 15 minutes before the close, and selling the dow 30 stocks in equal parts would lock in an arbitrage profit.
I think something is askew in the two prices, and there ought to be a way to profit from it.
I think something is askew in the two prices, and there ought to be a way to profit from it.
Quote from stock_trad3r:
buy all the dips. Futures recovering form this dip because Asian markets are surging. Expect European markets to surge, too. Then the futures will turn green for another big rally tomorrow.
right again about the big rally part. bull market can't be stopped. keep buying.