23 lines
1.7 KiB
Plaintext
23 lines
1.7 KiB
Plaintext
588
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SUMMARY
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Part V: Index Options and Futures
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This concludes the discussion of index spreading. The above examples are intended
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to be an overview of the most usable strategies in the complex universe of index
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spreading. The multitude of strategies involving inter-index and intra-index spreads
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cannot all be fully described. In fact, one's imagination can be put to good use in
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designing and implementing new strategies as market conditions change and as the
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emotion in the marketplace drives the premium on the futures contracts.
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Often one can discern a usable strategy by observation. Watch how two popu
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lar indices trade with respect to each other and observe how the options on the two
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indices are related. If, at a later time, one notices that the relationship is changing,
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perhaps a spread between the indices is warranted. One could use the NASDAQ
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based indices, such as the NASDAQ-100 (NDX) or smaller indices based on it (QQQ
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or MNX). Sector indices can be used as well. This brings into play a fairly large num
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ber of indices with listed options (few, if any, of which have futures), such as the
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Semiconductor Index (SOX), the Oil & Gas Index (XOI), the Gold and Silver Index
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(XAU), etc. The key point to remember is that the index option and futures world is
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more diverse than that of stock options. Stock option strategies, once learned or
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observed, apply equally well to all stocks. Such is not the case with index spreading
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strategies. The diversification means that there are more profit opportunities that are
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recognized by fewer people than is the case with stock options. The reader is thus
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challenged to build upon the concepts described in this part of the book. |