In this week's episode, sprocket888 and viperxl007 tackle the big topic of futures. There is a lot to unpack with this topic, but looking piece by piece, it is not as complex as you might think. This is by no means an in-depth look. Instead, they cover the very basics of futures and options on those futures. The key points discussed are the greeks on the options and how they vary during different expiration time frames. The properties of these greeks and how they behave can be used to exploit interesting trading styles depending on the expected price movement and the time left in the option.

  • 00:00 Disclaimer
  • 00:18 Intro
  • 01:20 The aspects of futures trading that we will cover
  • 02:20 S&P Index Futures
  • 03:23 Equity Futures trade nearly 24x5
  • 04:10 Futures Expire
  • 05:32 Futures are not all the same size
  • 07:44 Futures have added tax benefit
  • 09:52 You usually have to ASK to be able to trade futures
  • 10:27 Futures ALSO have options
  • 10:39 Visualize the margin requirements
  • 11:07 /ES margin requirement
  • 12:39 /MES margin requirements
  • 13:06 SPY Margin Example
  • 13:48 Options contracts in futures are 1:1
  • 15:25 These options expire too
  • 15:45 American or European
  • 17:13 cmegroup.com is the place to go to find all the spec sheets
  • 22:46 viper is trying something new
  • 28:58 Round-the-clock trading is interesting, considering other regions of the world
  • 32:55 P/L on an option is not always a linear relationship from the underlying
  • 42:48 Options can be used to trade shares synthetically
  • 43:43 When using options for shares, consider minimizing the impact of the 'greeks.'
  • 45:32 The farther out the time to expiration, the more 'linear' the price impact is
  • 48:14 Visualizing the effects of the 'greeks' and days to expiration (DTE)
  • 50:21 Gamma, on low DTE, this is the turbocharger
  • 54:37 Real pricing of options and DTE
  • 57:31 Knowing HOW the machine works will elevate your trades
  • 61:35 Conclusion: Emotions will strike at any moment. Stay vigilant
  • 64:31 Outro

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