Differences between SPY and ES Intraday Trading - Emini Index Futures Trading | futures io social day trading
futures io futures trading


Differences between SPY and ES Intraday Trading
Updated: Views / Replies:6,570 / 22
Created: by mnwind Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

Differences between SPY and ES Intraday Trading

  #11 (permalink)
Elite Member
Georgia, US
 
Futures Experience: None
Platform: Various
Favorite Futures: Various
 
josh's Avatar
 
Posts: 4,897 since Jan 2011
Thanks: 5,143 given, 11,242 received


Anna K View Post
Does anybody know what explains the difference today between ES, which gapped up above yesterday's high, and SPY, which opened in the middle of yesterday's range?

thanks.

@Anna K
Ex-div date for SPY (happens every quarter on HMUZ cycle expiration day) -- 93 cents this time.

Reply With Quote
The following 3 users say Thank You to josh for this post:
 
  #12 (permalink)
Patience my young padawan
Houston, TX/USA
 
Futures Experience: Intermediate
Platform: NinjaTrader TWS Barchart
Broker/Data: IB / IB
Favorite Futures: ES & looking into commodities
 
ElChacal's Avatar
 
Posts: 314 since Nov 2014
Thanks: 386 given, 185 received


bobwest View Post

Naively, in part because of the nature of leverage and risk in the two instruments. With options, you've bought the thing (from what you wrote I'm assuming outright directional trades [unhedged], although perhaps not). You can lose, but you can't lose more than you put in. [Note: that's 100%, which is a big percent.]

With futures, you've put up a small margin to cover the likely price variation of the instrument. If price moves against you more than your margin, which is not hard, you will owe more than you have put in, and if you can't either cover the margin call or get closed out in time, things can get messy. [Note: that's more than 100%, which is a bigger percent.]

Bob.

I have been looking into SPY, SPXL and SPXS ETF's to swing trade (on a daily chart no intraday). Unfortunately, my Stoploss is too far on the ES contract to trade this without hurting my account in case it goes the wrong way.

What I am not sure is how many shares of SPY I should buy to make an equivalent ES?
I believe that half the value of an ES point would fit my account size, to help me sleep better.

@bobwest how is a Call or Put Option better than purchasing the (outright?) stock?

Reply With Quote
 
  #13 (permalink)
Market Wizard
Sarasota FL
 
Futures Experience: Intermediate
Platform: NinjaTrader, Sierra Chart
Favorite Futures: ES
 
Posts: 3,636 since Jan 2013
Thanks: 26,761 given, 11,119 received
Forum Reputation: Legendary



ElChacal View Post
I have been looking into SPY, SPXL and SPXS ETF's to swing trade (on a daily chart no intraday). Unfortunately, my Stoploss is too far on the ES contract to trade this without hurting my account in case it goes the wrong way.

What I am not sure is how many shares of SPY I should buy to make an equivalent ES?
I believe that half the value of an ES point would fit my account size, to help me sleep better.

@bobwest how is a Call or Put Option better than purchasing the (outright?) stock?

Well....

Purchasing a call or put outright (meaning, you just are long the call or put, not hedged or any other strategy) is not really comparable to purchasing the stock or ETF.

Here are two simple differences:

1. The option will expire. At that point its value is zero. As time goes on, the approaching expiration will cause a decline in price, unless the underlying stock/ETF is in a strong trend to offset that decay. The stock or ETF won't do that. This is not exactly "better," most of the time.

2. The leverage, meaning the size of the profit or loss you have as a percentage of your purchase price, can be enormous. An option doubling in price in a few weeks (or days or hours!) is not unusual. It goes the other way, too, and can go down to zero fairly quickly. This is not so "better" either, although the leverage is a reason that many people will buy options. Usually they are just going to lose, because their directional bet has to be very right, to offset the decline of price over time as expiration approaches.

In fact, a very profitable strategy is just selling the options, not buying them. The buyer will usually just see his purchase price disappear due to time decay, while the seller keeps the money. This is called "selling premium" and can make you a good income, although it is not risk-free either, or it wouldn't be possible to make a profit doing it.

The entire world of options is complex and tricky. If sleeping better is part of your goal, as you mentioned, then you will need to look into it a lot deeper before trying it out, and only with money that you don't mind putting at serious risk. Read a few good options books and then be willing to pay the tuition in the market (that is, take losses) to really learn about them.

If ES is too risky, just buy the ETF and sleep at night.... Stay away from buying the options.

Bob.

Reply With Quote
The following 4 users say Thank You to bobwest for this post:
 
  #14 (permalink)
Patience my young padawan
Houston, TX/USA
 
Futures Experience: Intermediate
Platform: NinjaTrader TWS Barchart
Broker/Data: IB / IB
Favorite Futures: ES & looking into commodities
 
ElChacal's Avatar
 
Posts: 314 since Nov 2014
Thanks: 386 given, 185 received

@bobwest Thanks great explanation. I think I need $25k to test the ES waters based on money management rules. I will stick to ETFs for now.

Reply With Quote
 
  #15 (permalink)
Energy futures Superfreak
charlotte nc
 
Futures Experience: Master
Platform: Sierra Chart, TOS, Tradestation, NinjaTrader
Favorite Futures: energy
 
Posts: 114 since Jul 2012
Thanks: 81 given, 164 received

one other quick thought, on low cost brokers like IB, the commissions are much much much cheaper. throwing 200-500 spy around on IB is going to be 2-4$ a turn, which isnt much different than a future which is going to get you for 2.50$ a turn
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

Reply With Quote
 
  #16 (permalink)
Membership Temporarily Revoked
San Diego, CA, USA
 
Futures Experience: Intermediate
Platform: NinjaTrader, MarketDelta
Broker/Data: AMP Futures
Favorite Futures: ES
 
Posts: 0 since May 2015
Thanks: 12 given, 55 received


bobwest View Post

With futures, you've put up a small margin to cover the likely price variation of the instrument. If price moves against you more than your margin, which is not hard, you will owe more than you have put in, and if you can't either cover the margin call or get closed out in time, things can get messy. [Note: that's more than 100%, which is a bigger percent.]


Bob.

Check the brokerages. Mine will liquidate (for a fee) any position that exceeds 80% of your account automatically.

Reply With Quote
 
  #17 (permalink)
Patience my young padawan
Houston, TX/USA
 
Futures Experience: Intermediate
Platform: NinjaTrader TWS Barchart
Broker/Data: IB / IB
Favorite Futures: ES & looking into commodities
 
ElChacal's Avatar
 
Posts: 314 since Nov 2014
Thanks: 386 given, 185 received

Disregard my comment above. Started with $11k and currently trading ES. It is pretty bold because my stoploss order is above the 3% account rule but I believe I have some "edge" to my trading strategy.
I found a good strategy after a little over (1) year of thoroughly backtesting lots of ideas out there.
What you cannot do is trade futures with scared money, that is why at least some "edge" is crucial.

Reply With Quote
 
  #18 (permalink)
Market Wizard
Sarasota FL
 
Futures Experience: Intermediate
Platform: NinjaTrader, Sierra Chart
Favorite Futures: ES
 
Posts: 3,636 since Jan 2013
Thanks: 26,761 given, 11,119 received
Forum Reputation: Legendary


bobwest View Post
With futures, you've put up a small margin to cover the likely price variation of the instrument. If price moves against you more than your margin, which is not hard, you will owe more than you have put in, and if you can't either cover the margin call or get closed out in time, things can get messy. [Note: that's more than 100%, which is a bigger percent.]


Southpaw View Post
Check the brokerages. Mine will liquidate (for a fee) any position that exceeds 80% of your account automatically.

Right, and most, of course, will. If they didn't, they would be stuck with the loss, not you, because they would still be responsible to their clearing broker, which is responsible to the exchange. If they have to take it, they will go after you for it.

Closing you out is meant to keep the loss down, and it will unless the market is moving too fast for them to get a good fill (definitely happens), and unless there is a trading halt due to a limit down day... which means no one can get out. We came very close to limit down in many of the big equity contracts within the last couple of days.

In most cases, your risk will not be more than your account, but it can happen, and sometimes will.

The point of the original post was that you can (rather easily) lose 100% on your option position, but no more than that -- which is a small comfort -- but it can be more in futures. Just a comparison between the two in terms of max risk. Both can be pretty frightful if you're not prepared for it, and haven't managed your risk well.

Bob.

Reply With Quote
 
  #19 (permalink)
Patience my young padawan
Houston, TX/USA
 
Futures Experience: Intermediate
Platform: NinjaTrader TWS Barchart
Broker/Data: IB / IB
Favorite Futures: ES & looking into commodities
 
ElChacal's Avatar
 
Posts: 314 since Nov 2014
Thanks: 386 given, 185 received


bobwest View Post
Right, and most, of course, will. If they didn't, they would be stuck with the loss, not you, because they would still be responsible to their clearing broker, which is responsible to the exchange. If they have to take it, they will go after you for it.

Closing you out is meant to keep the loss down, and it will unless the market is moving too fast for them to get a good fill (definitely happens), and unless there is a trading halt due to a limit down day... which means no one can get out. We came very close to limit down in many of the big equity contracts within the last couple of days.

In most cases, your risk will not be more than your account, but it can happen, and sometimes will.

The point of the original post was that you can (rather easily) lose 100% on your option position, but no more than that -- which is a small comfort -- but it can be more in futures. Just a comparison between the two in terms of max risk. Both can be pretty frightful if you're not prepared for it, and haven't managed your risk well.

Bob.

True, that is why one should always have a Stop in place. The stop is your risk. It can be more than the stop loss if price gaps badly, but in contracts with sufficient volume I think gaps are unlikely.

Reply With Quote
 
  #20 (permalink)
Market Wizard
Sarasota FL
 
Futures Experience: Intermediate
Platform: NinjaTrader, Sierra Chart
Favorite Futures: ES
 
Posts: 3,636 since Jan 2013
Thanks: 26,761 given, 11,119 received
Forum Reputation: Legendary



ElChacal View Post
True, that is why one should always have a Stop in place. The stop is your risk. It can be more than the stop loss if price gaps badly, but in contracts with sufficient volume I think gaps are unlikely.

You're right, on the whole.

I'm not trying to get an argument going , but, while it is certainly good to have a "disaster" stop in place, or at least I do (some good traders don't -- see the S&P spoos thread), it really is not a foolproof safeguard. In a true disaster, you do not know where, or if, you will get filled.

During the flash crash, there was no liquidity at all, and you have no idea where your stop would have gotten filled; probably near the bottom, when some buying finally came in.

Today, you don't know where you would get filled if there were a trading halt due to limit down. Remember, there is a whole lot of volume in ES, but we were within a whisker of being limit down the other day.

Sorry to go on about this topic; by all means, assess your risk profile and make your own decisions about what you want to do. Just trying to fill in some of the details here.

I hope you do well in your trading.

Bob.

Reply With Quote
The following user says Thank You to bobwest for this post:

Reply



futures io > > > > Differences between SPY and ES Intraday Trading

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
SPX/ES/SPY: who leads and who follows and why? snusnufreak Emini Index Futures Trading 17 February 15th, 2016 03:26 PM
SPY, SPX or /ES? MarvelousMoshe Stocks and ETFs Trading 2 August 25th, 2013 09:39 PM
How to trade SPY by putting orders on ES? (MultiInstrument trading) zokirb The Elite Circle 10 January 29th, 2012 11:09 AM
Trading SPY options or ES? blockschip Traders Hideout 8 September 11th, 2011 07:06 PM
SPY Intraday Data TraderSU The Elite Circle 6 December 25th, 2010 08:18 AM


All times are GMT -4. The time now is 10:42 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-16 in 0.16 seconds with 19 queries on phoenix via your IP 54.227.51.103