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Thank you for your clarification, but the fact remains:
When I day-trade stocks, I often exit the trade with only 10 to 15
pts; thus for 1000 stocks purchased, its a $ 100 to 150 gain, and I
am happy with that. Now, if I trade the SAME stock in its SSF
version, and that the spread is 5 pts instead of 1 pt, my benefit
would be only $50 to 100 refering to the example I gave.
This a huge difference !
Therefore I still do not see any advantage switching to SSF trading,
at least my "business case"
Regards
Carl
--- In realtraders@xxxxxxxxxxxxxxx, I4Lothian@xxxx wrote:
> First the disclosure. I am a futures broker and big propoent of
Single Stock
> Futures. SSFs are not for everyone.
>
> That being said, there is great potential in SSFs and potentially
even more
> in the future if we can get a few things changed. Clearly, SSFs
have not been
> the big success that so many, including myself, expected them to
be. However,
> neither were lots of other successful products at first, including
equity
> options and Eurodollars.
>
> SSFs at this point are a Market Maker driven market. The MMs have
automated
> price injection models the make markets in SSF based on the price
of the
> underlying stocks. The MMs are making markets in several SSFs all
at the same
> time. It is kind of like ice fishing, setting up lines over holes
all over the
> lake. When line gets tripped, then the fisherman takes a look.
Same thing
> pretty much with SSFs.
>
> There are other ways to get the attention of the MMs, and that is
to request
> a quote from the exchange. If you have quantity to move, you can
ask the
> exchange for an RFQ to get you more size shown or even a tighter
market. There is
> a $100 million CTA that regularly trades SSFs and they have no
problem
> trading 2 to 3 thousand contracts all at one price.
>
> Even though the MMs are making wider markets, there are also cost
savings
> with SSFs that you need to take into consideration. You are not
paying for the
> margin on SSFs, which is 20%, not 50%. Your open trade equity is
usable for
> other markets. Thus, you don't need to sell your stock to
utilize the gains
> from a big winner.
>
> SSFs have a place for some traders. There are things you can do
with SSFs
> that you can't do, or can't do as well or as easily, with SSFs.
For example,
> we have been tracking the trade of Coke versus Pepsi. If you want
to do this
> trade, it is easier to do with SSF on a single trading platform
and no up tick
> rule to contend with.
>
> To me SSFs are extremely liquid, though the volumes may or the bid
offer may
> not reflect it. The MMs have the huge equity markets, options,
ETFs or
> futures to lay risk off into and that is exactly what they do.
There is no cash
> market for a futures contract that is so easily accessed.
>
> SSF may not be for everyone, but don't dismiss them for the volume
they are
> doing. They can do as much volume as almost any individual trader
would want
> to do.
>
> Regards,
>
> John J. Lothian
>
> Disclosure: John J. Lothian is the President of the Electronic
Trading
> Division of The Price Futures Group, Inc., an Introducing Broker.
>
>
>
> In a message dated 5/24/2004 5:52:09 AM Central Standard Time,
> carlvan@xxxx writes:
> For some time now, I have been day-trading stocks on NYSE and
> Nasdaq.
> Recently, I received an invitation from my broker to attend an
> online conference to trade SSF on NQLX and Chicago ONE exchanges.
>
> But when I checked the live quotes, I was disappointed: while it
> looks interesting because you have no uptick rule with SSF, I was
> hurt when I discovered the bid-ask spread: an ashaming 5 to 7 pts,
> while the same spread on the underlying stock is only 1 pt !!!
> Has anyone some experience with Signle Stock Future trading, am I
> missing something, is this really interesting compared to real
stock
> trading ?
>
> Thank you for your comments
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