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Hello Michael,
Michael Berger wrote:
>
> 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).
Cash Settlement.
>
> 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.
Good thought about the absence of time decay. Options aren't for
everyone.
>
> With the above, there will probably be increased
> institutional activity, on both sides.
Institutional activity should be heavy, especially now, when they are
looking to cut expenditures. I wonder how many SP 500 stocks contracts
will be written for. The futures may become the leading price discovery
mechanism, so new indexes need to be created. More than 85% of sp500
stocks are NYSE-listed.
>
> Better collateral value will be possible on stocks hedged
> with futures, rather than options, as more protection is
> provided.
What protection did you have in mind?
>
> All the advantages should multiply geometrically.
Yes, my sense is stock futures are going to take off, and leave wakes
in the sp futures.
>
> 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.
I haven't traded options on stocks, but stock futures look good to me.
Regards,
Monte
>
> ----- 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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