oatman - please be gentle on me - I'm used to trading d4f rolling cash so I'm just getting used to how the various futures interact.
I agree if I was day trading that it would be best to use the most liquid future, but I'm using futures as a cheap alternative to holding an index tracker. I'm buying z whenever it falls to 3900 and selling it whenever it rises to 3950.
There are two reasons why I was selling the December contract:
1. As many of my contracts I might be holding for a long time - I don't want them in a future that is going to expire and have to think about transferring to another future - possibly at a loss.
2. The dec contract has the highest price so it will hit 3950 even if the ftse only rose to 3940. I'm assuming (possibly wrongly) that with time another future will be priced higher than the december future and I will be able to sell the dec contracts and buy some cheaper ones for a later date. So as well as making a reasonable profit on the rise of the fTSE i'm doing a little arbitrage of the ftse futures while I'm at it.
It's all a learning process so I'm quite happy to admit that I might not be doing the smartest thing.
Don't worry too much - because as soon as I've made 15k of capital gains - I'm going back to spreadbets!
John.
I agree if I was day trading that it would be best to use the most liquid future, but I'm using futures as a cheap alternative to holding an index tracker. I'm buying z whenever it falls to 3900 and selling it whenever it rises to 3950.
There are two reasons why I was selling the December contract:
1. As many of my contracts I might be holding for a long time - I don't want them in a future that is going to expire and have to think about transferring to another future - possibly at a loss.
2. The dec contract has the highest price so it will hit 3950 even if the ftse only rose to 3940. I'm assuming (possibly wrongly) that with time another future will be priced higher than the december future and I will be able to sell the dec contracts and buy some cheaper ones for a later date. So as well as making a reasonable profit on the rise of the fTSE i'm doing a little arbitrage of the ftse futures while I'm at it.
It's all a learning process so I'm quite happy to admit that I might not be doing the smartest thing.
Don't worry too much - because as soon as I've made 15k of capital gains - I'm going back to spreadbets!
John.
Well done on the trade, I can see why you would want to trade in the deferred positions, but just be careful you don't get taken apart on the spreads.
You can quite safely trade FTSE positions up to the day of expiry, and rolling a position should only cost you £8.00 maximum (probably cheaper on IB).
Just for examples sake, Jun FTSE has traded c44600 lots, Dec 103 lots. The last thing you need is a trade that you can't get out of because nobody wants to play ball with you
.. but at the end of the day, each to their own!
2. The dec contract has the highest price so it will hit 3950 even if the ftse only rose to 3940.
Buy the same thought process, dec won't hit 3900 even though the nearby does.
You can quite safely trade FTSE positions up to the day of expiry, and rolling a position should only cost you £8.00 maximum (probably cheaper on IB).
Just for examples sake, Jun FTSE has traded c44600 lots, Dec 103 lots. The last thing you need is a trade that you can't get out of because nobody wants to play ball with you
.. but at the end of the day, each to their own!
2. The dec contract has the highest price so it will hit 3950 even if the ftse only rose to 3940.
Buy the same thought process, dec won't hit 3900 even though the nearby does.
