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Also, the Spyders trade much like a future, that is, you do not need an
uptick to go short. The disadvantage of the Sypder/futures is the lack of
leverage. You do not have the premium, however.
I have been trying to develop an arb methodology watching the SPX, the ES,
and the SPX futures.
Amazing! They do NOT trade in lock step, as one might think. I also use
Brown&Co.
Al Taglavore
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> From: Bill Saxon <bsaxon@xxxxxxxxxxxxxxx>
> To: Metastock EMail List <metastock@xxxxxxxxxxxxx>; Fasttrack EMail List
<fasttrack@xxxxxxxxxxxxxx>
> Subject: Spiders
> Date: Saturday, August 08, 1998 7:11 AM
>
> Might I slip a few words edgewise on TA (as opposed to MS)?
>
> I use Rydex for a portion of my portfolio to trade Nova and Ursa. I
think most
> are aware of the calculations that show Nova to go up a percentage point
less
> than an Index Fund like Vanguard (adjusted for the 1.5 factor) and down a
> percentage point more (and perhaps a little more than that). Apparently
this
> has to do with the Futures Premium involved or perhaps the fact that
dividends
> are not being paid.
>
> In addition there is no intraday trading (witness Tuesday when the S&P
was up 6
> pts in the AM when many would have exited, but by the time Nova could
have been
> traded was down 40 pts.)
>
> My understanding is that I can trade long and short S&P Spiders with the
> following advantages.
> 1. Intraday trading just like a stock
> 2. If traded at a place like Brown it is only $5 a trade. This has to
be less
> than the management fee at Rydex, of course depending on the dollar
amount
> traded.
> 3. What ever percentage that they go up would be equal to the percentage
they
> go down in relation to the S&P.
> 4. The money would be in place at a brokerage where other vehicles could
be
> used at an appropriate time as opposed to being locked in to the funds
offered
> by Rydex.
>
> There is always some downside. What is it??
>
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