writing index puts question

[magnum29464]

Does writing e mini puts work the exact same way as writing a normal stock puts? how many contracts does the put represent? is the premium multiplied?

its pretty obvious I've never written futures puts..

 

[MTE]

Yes, it works pretty much the same way, except that only quaterly options expire into cash, serial expire into a futures contract. 1 option is for 1 futures contract (check contract specs on CME's website).

 

[magnum29464]

Quote from MTE:

Yes, 1 option is for 1 futures contract (check contract specs on CME's website).

this is what I couldn't quite understand. So when you write options for indexs do you just get the premium itself not multiplied like you do with equities?

 

[MTE]

Quote from magnum29464:

this is what I couldn't quite understand. So when you write options for indexs do you just get the premium itself not multiplied like you do with equities?

The multiplier is the same as for futures, which is $50 for the ES. http://www.cme.com/trading/prd/equity/emini-sp500_OA.html

 

[atticus]

1. Don't sell stops.

2. Don't underwrite flood insurance in the dry-season.

 

[dmo]

Quote from magnum29464:

this is what I couldn't quite understand. So when you write options for indexs do you just get the premium itself not multiplied like you do with equities?

In stocks, 1 option is an option on 100 shares of stock.

In futures, 1 option is an option on 1 futures contract. One-to-one relationship.

 

[dmo]

Quote from atticus:

Don't underwrite flood insurance in the dry-season. [/B]

LOL, very well put. Best to sell flood insurance just after a flood. People will pay a big premium for it.