FTSE 100 intraday trading - JULY 2003

[jonnyy40]

Back to basics here.Why would cash follow the futures?The cash index is the result of millions of shares being traded every few minutes.The futures chart is a representation of usually 50,000x£10 contracts being traded/day. Why would the cash follow the futures? The cash will be the future at some specific point,at most 3 months? ------------- Sorry,by the time I decided to write,didn't realise there'd be half a dozen replies

 

[bonsai]

steve
others may come up with different answers but
either could happen.

You have to put yourself in the mind of someone who may
have say £5million to invest.
How can he best do that ? without pushing up the price to
make it expensive for himself ?

Any combination of cash/futures/options etc is available to
execute his program.
(including a few sells on the way to try and disguise what
he is doing to the rest of the world)

 

[waqr]

Steve

If the big boys decide to buy the bank sector then prices rise and the cash index should increase.The reason that the future leads cash is simply because it is easier to trade one instrument representing all 100 shares than dealing in 100 different shares.

 

[waqr]

jonnyy40

50,000 contracts at£10 is actually [at present levels] 50000 x 40700 which is equivalent to £2,035,000.000

 

[bonsai]

er um ?
my arithmetic must be rusty ?

 

[waqr]

er um ?
my arithmetic must be rusty ?

fifty thousand x fourty thousand seven hundred ?

 

[bonsai]

40,700x5=203,500
203,500x10,000=£2,035,000,000

what am I doing wrong ?
or have you put in a decimal instead of a comma ?
lol
£2bn ? pretty big trade ?

 

[bonsai]

you cant really separate them
they are tied together albeit by an elastic umbilical.

if I buy an option, the mm will buy the future to cover
if I buy the future the mm will buy the cash to cover
etc
cash and futures are held together by fair value and
the 'abitrageurs' who trade any difference.

its a pretty 'efficient' and 'liquid' market place.

 

[waqr]

jonnyy

The fact is that when you buy a futures contract you are buying £40,700 worth of ftse 100 stocks[if the price is at 4070] and will be obliged at expiry to pay in the diff if the price has fallen or you will receive the diff if the price has risen. The important pt. is that £10 is the value of 1 tick not 1 contract.

Any comparison with the total value of all the ftse constituents is meaningless

 

[jonnyy40]

Yes,sorry,I'll delete the previous posts before too many see.

 

[waqr]

bonsai,

If you buy the future there is no mm involved. The ftse futures market does not have mm's

 

[barjon]

a late mornin' all

ftse is a representation of what is happening to its constituent shares. Those shares are directly affected by supply and demand but the ftse is not. ie) any trade of the ftse cannot of itself move the index - only changes in the constituent share price can do that. Thus it seems odd that it obeys ta techniques so well since ta is based on supply and demand.

can only think that mms hedge ftse trades by buying/selling constituent shares in the right proportion but that would seem to require some heavy trading on their part.

good trading

jon

 

[waqr]

barjon,

dont think we still have mm's in ftse 100 stocks ?? not sure though, maybe somone else knows ?

 

[barjon]

waqr

then that makes it all the more odd!!

jon

 

[bonsai]

waqr
of course we have mm's.
both cash and futures

its just that they dont look the same.

 

[waqr]

waqr
of course we have mm's.
its just that they dont look the same.

In futures or ftse 100 stocks? Explain please

 

[bonsai]

ttt

 

[jonnyy40]

Carefull Waqr, if we get the dancing Chicken, I'm gone.

 

[bonsai]

lol

 

[waqr]

ttt

is this your reply to my previous post ?