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Emini - Cash Settlement Question
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Emini - Cash Settlement Question

  #1 (permalink)
Elite Member
Farmington Hills, MI
 
Futures Experience: Intermediate
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Broker/Data: Tradestation
Favorite Futures: YM
 
desitrader's Avatar
 
Posts: 26 since Oct 2011
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Emini - Cash Settlement Question

Hi Traders,

I never had a open position in futures after market or over weekend until now.

Appreciate if someone can explain below:
Example:
1) Short 1 Emini YM @ 25800 on 01/12/18
2) Settlement price on 01/12/18 close is 25801
3) So (25800-25801)*$5 = -$5 is taken our of my account to settle for day.

When market opens on Monday evening (01/15), lets say if i am able to cover my short at 25790 during the day.
My question is, will my profit be calculated from:
(a) initial trade position open price (25800) to position close price (25790) ? (i.e. 10 ticks?)
OR
(b) previous day settlement price (25801) to position close price (25790) ? (i.e. 11 ticks?)

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  #2 (permalink)
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  #3 (permalink)
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Hey man..


What you are describing is a daily mark to market. Your "new" price in that scenario would be your marked price, not your executed short price.

One thing to consider. Are you intending to swing trade over the weekend? If that is not a specific strategy be aware that the unhedged risk you are taking could hurt you for real. I will not carry an ES futures position over the weekend like I used to.

But yeah, what you lose or make on the mark to market establishes the mark as your new price. Effectively the mark takes or makes and you trade that cost basis the next session. If you are positioning or swinging with futures you might benefit from minding the position P/L based on your initial entry.

Dan

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  #4 (permalink)
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From the CME...

https://institute.cmegroup.com/courses/introduction-to-futures-html/modules/mark-to-market

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  #5 (permalink)
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wldman View Post
What you are describing is a daily mark to market. Your "new" price in that scenario would be your marked price, not your executed short price.

One thing to consider. Are you intending to swing trade over the weekend? If that is not a specific strategy be aware that the unhedged risk you are taking could hurt you for real. I will not carry an ES futures position over the weekend like I used to.

But yeah, what you lose or make on the mark to market establishes the mark as your new price. Effectively the mark takes or makes and you trade that cost basis the next session. If you are positioning or swinging with futures you might benefit from minding the position P/L based on your initial entry.

Dan


Thank you Dan!

I am doing this only to stay neutral/hedge over weekends against my longs in index fund etfs. With market heating up, i want to my overall portfolio movement to be close to 0, no matter if market gaps up or down over weekends.

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  #6 (permalink)
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Then...

you are doing it right in my opinion.

I am very active so I do not have a variable full hedge that I can plug in and out. But, I almost always have long puts either on individual companies or SPY. In the last two weeks I have been thinking about the benefits of a plug in delta neutral hedge. Seems too expensive for me, except if the next pullback is a monster.

One other thing is smartstops dot com or tradestops dot com Ive been looking at both of those as something to add but like I said I am very active and would close longs if a decline looked or felt precipitous.

As an example. I own 75 dollar AAPL. On that last little pullback I bot some Jan 19 170 calls for 17.40. Next week I'm looking to sell those calls for 22. This will partially finance the Jan 19 170 or 175 puts. I'll buy those for protection, yes they are expensive.

But if between now and the next 300 or so days AAPL comes in a bit I'll make money selling the puts and I'll do that over again.

My fear right now is the capitulation buy that seems to be going on. I'm not calling it, but when this market sells off it could be a big move.

All the best.

Dan

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  #7 (permalink)
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I get very little time...thats why I am only index etfs...401k doesnt allow options, even if they did I don't prefer options for hedging because of high premium..hedging with futures in little more efficient and cost effective imho. Anyways I need protection only during weekends as weekdays you can have (hopefully ) time to react. I just go with market...its going up and I am all in long but with eyes wide open....

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  #8 (permalink)
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desitrader View Post
Thank you Dan!

I am doing this only to stay neutral/hedge over weekends against my longs in index fund etfs. With market heating up, i want to my overall portfolio movement to be close to 0, no matter if market gaps up or down over weekends.

Just as an aside you may want to also check the correlation between the index funds you are holding and the @ES contract if it is too low you can still get burned on your short contract, ideally the closer you are to 1 on that correlation the better your hedge(assuming you didn't already know that)

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