Conference nyoss1::market_investing

    
    	Absolutely.
    
    	They are called futures, traded on the Chicago Merchantile Exchange
    	and the symbol is OEX.
    
    
    		the Greyhawk

The S&P 500 index mutual funds track the index because they 
purchase the securities that make up the index.  They are valued,
bought, and sold in the same way as other mutual funds, i.e. net
asset value is calculated at day's end, the purchases and sales
are made at that price. 

Index futures, on the other hand, are actively traded, with 
prices changing from minute to minute.

Of course, with a mutual fund, the worst you can do is to lose 
all of your money.  With futures (and margin) you can lose *more* 
than all of your money.

Wes

    Thanks for the quick replys Greyhawk and Wes.

    I don't want to trade S&P Futures.  Instead, I want to trade the
    value of the S&P Index.  I might use S&P Futures (OEX) as one of the
    buy/sell/hold indicators.  OEX might even be the most important
    indicator.

    Heres one possible buy/sell scenario.

    At 9:29am the value of OEX is up relative to its value at the close
    of the last NYSE trading day.  This seems to be a good indicator
    that the S&P Index will rise during the opening minutes of trading. 
    It would be very nice to be able to execute a quick transaction to
    profit (hopefully) from this knowledge.

    Unfortunately, I doubt that I am the only person who has made this
    observation.  Fortunately, that probably means that there is a way
    to profit from it.

    roger
    

    
    roger -
    
    	That is why the OEX futures exist. Of course, if you have Millions
    	of $$$ burning a hole in your pocket, I suppose you could purchase
    	the underlying securities in blocks of 10K, or more, and then sell
    	options on those securities as a package and thus, viola, the OEX
    	:-)
    
    	Funny how that works now, isn't it...
    
    		the Greyhawk

    Greyhawk,

    I have considered buying the 500 stocks which make up the S&P.
    Unfortunately, I don't think that there is sufficient time to
    execute this kind of trade profitably and reliably.  Additionally,
    the paperwork would be hell.  I'm hoping that there is some
    organization the will do this for me saving time, money, and lots
    of trees!

    Thanks for your ideas.

    roger

    Greyhawk, get it right.
    
    OEX is the symbol for options on the S&P 100 index. Actually OEX is the
    original name. OEX options are traded on the Chicago Board [of Trade]
    Options Exchange (CBOE). "OEX" refers to the [cash] value of the index.
    Options are priced like stocks, e.g., OEXSC = July 515 Puts.
    
    The S&P 500 _futures_, ticker symbol is SP <month><year>, e.g., SP U5
    for Sep95 futures, sometimes SPU5 depending on quote vendor. S&P
    futures and futures options are traded at the Chicago Mercantile Exchange
    (CME), which has no resemblance to the Chicago Board of Trade, except
    they're walking distance from one another.
    
    There are options on the S&P500 _index_, SPX, that work a lot like the OEX
    in that they are traded as equity options. Except they are European
    style exercise while the OEX are American style. 
    
    There are also futures options different from any of the above, priced
    off the appropriate S&P500 futures contract, also traded at the CME.
    
    Now back to .0s question. Here are your alternatives:
    
    - S&P, NYFE or Value Line futures. You say you don't want to do these.
      Pity. This is where you stand to make the most money if you're right.
      Of course you also stand to lose the most if you're wrong.
    
    - In-the-money OEX or other options. These will move nearly point-for-
      point with the underlying index. The OEX and SPX track each other 
      fairly closely but your losses are limited. Since you plan to trade
      on a very short term the fact that these are options, hence have
      time value decay, probably doesn't matter much. OEX options are more
      liquid in the near months than SPX so they are preferred.
    
    - Standard & Poor's Depository Receipts (SPDRs). A[n] SPDR ("spider") is
      a share in a closed-end fund that trades exactly the S&P500 index.
      Each SPDR is 1/10th of everything that goes into the index. These
      look and behave like shares of stock and trade on the AMEX under
      ticker symbol SPY. With the index at ~545, each SPY share has an
      intrinsic value of 54�. But of course the shares trade at a premium
      or discount to that value based on anticipation of future value.
    
      SPDRs are highly liquid with the market maker promising to trade at
      a 1/32 bid/ask spread for up to 50,000 shares.
    
    And now for the bad news: you can't do what you want to do. Not with
    the above, not with anything else.
    
    Suppose at 9:30 the SPX is 545.00 and good news hits the Street before
    the market opens. If you follow the index you might see a ticker that
    looks like: 545.00, 545.36, 545.81, 546.02, 546.43, 546.68, 547.11,
    547.42, 547.86, 548.09, 548.24, ... and 4 minutes later 552.83
    
    You think to yourself, "Gee, I coulda made 7.83 points if I'd just
    gotten that order in right at the open at 9:30." BZZZT! Wrong. If you
    had instead looked at the Futures ticker you would have seen the nearby
    futures at (say)  550.45 from last night's close. At 9:30 the futures would
    probably have opened at 557.50 with NO trading anywhere between last
    night's close and the opening price. The same thing would have happened
    to OEX options and SPDRs.
    
    I see this all the time, almost every day. Markets will gap up on
    news and nobody gets to buy on the cheap.
    
    Now if you want to enter on the previous day's close (remember: OEX
    and futures trade until 4:15pm ET) in anticipation of a gap tomorrow,
    that's a different story. You can do that. But you carry the risk of
    overnight contrary news.
    
      John

>In-the-money OEX or other options. These will move nearly point-for-point
>with the underlying index. The OEX and SPX track each other fairly closely
>but your losses are limited. Since you plan to trade on a very short term
>the fact that these are options, hence have time value decay, probably
>doesn't matter much. OEX options are more liquid in the near months than
>SPX so they are preferred.
    
     There is a wrinkle with in the money options.  The deeper in the 
money they are, the more closely they move point for point with the 
index.  But the deeper in the money they are, the more thinly they're 
traded and therefore the bigger the bid/ask spread.

     The spreads are significantly higher on the SPX than on the OEX.

     It is a bad idea to be short deep in the money OEX positions, because 
there is a good chance you'll be assigned.  

    
    	Thanks, John. 
    
    	Actually I know all that, but I was trying to be *very* brief while
    talking on the phone and just went haphazardly into my "get off this
    thing" mode.
    
    	But John has put the whole futures/options S&P500 stuff out
    perfectly.
    
    
    		the Greyhawk

    
    I listen to a business news radio report every day at about 9:00 AM
    EDT.  The S&P futures are trading at that point (on some exchange,
    somewhere, maybe CBOT?).  The analyst always tell you what the
    futures are trading at and uses the difference between the futures
    price and the prior evening's close as an indicator as to whether
    or not the market will open up or down.
    
    It's interesting to note that that among the very short term (intraday)
    traders, the smart money never goes home with a position overnight. 
    They are always fully hedged.  Being an insider (with a seat) offers
    such profit potential that it is foolish to risk it to external
    overnight events that you cannot control (Congress, politics, ...).
    
    And carrying a position overnight is the only way to profit on the 
    difference between yesterday's close and today's open.
    
    Jeff
   

>   I listen to a business news radio report every day at about 9:00 AM
>   EDT.  The S&P futures are trading at that point (on some exchange,
>   somewhere, maybe CBOT?).
    
    Yes, S&P's trade "overnight" on GLOBEX, which is an electronic exchange.
    No open outcry, just limit orders matched by computer. Overnight trading
    stops at 9AM. With a half an hour before the 9:30 "live" session, you
    often get a good correllation between the 9AM close and 9:30AM open.
    I've used this at times to predict opening options prices so as to get
    in or out at the open -- but only to fade the move when feeling contrary.
    
>    				Being an insider (with a seat) offers
>   such profit potential that it is foolish to risk it to external
>   overnight events that you cannot control (Congress, politics, ...).
    
    You can buy or, more likely, lease a seat and trade in the pits yourself.
    You need a bankroll of about $100,000 which is a lot of money but not
    beyond your imagination. But even the guys on the floor go broke with
    astonishing frequency. The annual turnover rate is at least 50%. They
    don't take positions home, but make up for it by trading in large lots.
    
      John