Why trade QQQ and SPY vs Emini S&P and mini nasdaq?
- Thread starter Cutten
- Start date
The advantages of futures are many, including better liquidity and better tax treatment.
One possible advantage for the stocks is that it may be possible to trade with a lower commission rate than with futures. For example, 800 QQQ might be done for no net commission (0.2 cps commission and 0.2 cps ECN rebate), while the same trade on the NQ's might cost ~$2-3. Another possibility is for those doing relatively short term trading in IRA's and are not able to do futures.
Otherwise, it's hard to think of many advantages of using the stocks.
-Eric
One advantage, at least with the QQQ, is the relative ease of hedging with options or constructing any number of underlying/options combination strategies. The futures options are extremely illiquid. Clearly, that's not the case with options on the QQQ.
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Actually could make a case for trading all three & some trade all;
Don Bright makes a good case for 90% stocks.
Like occasional stocks & options;
option taxes or commissions or even inferior liquidity
are less important to me than
100% certainty of risk[ and 100% no way margin call ]with leverage on occasional options.
Admit even the most liquid options are liquid enough ;
but arent as liquid & have inferior long term data compared to other markets
