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Stock Futures might replace options on the basis of:
Margins, liquidity, premiums, increased spreading, possibly
better/different settlement terms (I'm guessing a little
here).
Without the same concern for time decay, participation
should increase dramatically, both on the part of investors
/ speculators, but also on the part of hedgers.
With the above, there will probably be increased
institutional activity, on both sides.
Better collateral value will be possible on stocks hedged
with futures, rather than options, as more protection is
provided.
All the advantages should multiply geometrically.
I don't trade options, so I'm sure I only scratched the
surface on the benefits.
Remember the current Futures markets (grains, etc.) started
as option-type forward contracts.
----- Original Message -----
From: "Monte C. Smith" <mcs@xxxxxxxxxxx>
To: "Michael Berger" <mberger@xxxxxxxx>
Cc: "OmegaList" <omega-list@xxxxxxxxxx>
Sent: Saturday, May 26, 2001 4:37 PM
Subject: Re: need some ideas to (dis)prove an assumption
>
> Do you think stock futures will displace options on the
basis of
> margins?
>
> Monte
>
>
>
> Michael Berger wrote:
> >
> > There have been a number of recent threads on stock
option
> > this, stock option that.
> >
> > Once individual stock futures become active, which may
be a
> > year away, don't you think much of current stock option
> > testing will be moot?
> >
> > Just a thought.
> >
> > ----- Original Message -----
> > From: "caw" <cwest@xxxxxxxxxxxx>
> > To: <prosys@xxxxxxxxxxxxxxxx>; "OmegaList@xxxxxxx Com"
> > <omega-list@xxxxxxxxxx>
> > Sent: Saturday, May 26, 2001 3:51 PM
> > Subject: RE: need some ideas to (dis)prove an assumption
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