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the only difference would come if you traded on margin. Then instead of
1000 shares you would be able to trade more shares for the same amount of
money. I don't trade SSF, but the last time I looked different stocks had
different margin requirements.
----- Original Message -----
From: "Carl Vanhaesendonck" <carlvan@xxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, May 26, 2004 4:40 AM
Subject: Re: [RT] Single Stock Futures vs Stock Trading: not interesting ?
> 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
>
>
>
>
>
> Yahoo! Groups Links
>
>
>
>
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