# SPI nooby questions



## cbc1 (27 January 2013)

Hi all,

I've been circling the SPI futures contract now for around a month.  Signed up to IB and I"m just putting down the final calculations when I hit a few concerns.  


Now from my understanding the inital margin in roughly $6000 ATM.  So if I entered into 3 contracts (initial 18k) and there is a 30 point movement then I could expect a 2.2k return?  Is this right?  Thats just over a 10% return while the options contract would have chalked up a 60% return.    Doesn't sound like leverage to me 

Have I calculated this right?

Was anyone else concerned about putting such a large amount of money up front for that kind of return?

I wanted to use the SPI to hedge any option contracts I have on the XJO, BHP or CBA as these tend to follow each other closely aren't exactly the most liquid.

So if I wanted to hedge a 20k XJO position against a 10k unwanted movement then I would need to put up what?  roughly 80k on a futures position?  

I've only been trading a year any I don't av that much, nor do I want to take out a loan. Have I calculated everything right?  I haven't traded futures before.  I didn't want to use such a large % on a hedge.  Thats what 400% on a hedge?

Everywhere I've read on futures says that they are "much" riskier that options.


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## Trembling Hand (27 January 2013)

*Re: SPI nooby questions.*

Dude!!!!

$2250 win or LOSS!

Man 

Try looking into position sizing............


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## cbc1 (27 January 2013)

*Re: SPI nooby questions.*

Na,

No loss because I wasn't planning on making any money from the SPI.

Hedge?

Any movement againt me on the spi would be written up on my open option contracts.

Don't you like hedging?


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## CanOz (27 January 2013)

*Re: SPI nooby questions.*

Shorting the SPI at say...4900 and a 6 point stop loss, 20k account and 2% risk, 6000 in initial margin.

CanOz


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## Trembling Hand (27 January 2013)

*Re: SPI nooby questions.*



cbc1 said:


> Na,
> 
> No loss because I wasn't planning on making any money from the SPI.
> 
> ...




Yeah really. how is that gonna go with different Deltas :viking::sheep::batman::wreathirate:


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## cbc1 (27 January 2013)

*Re: SPI nooby questions.*

Yea I'm aware its not going to match $ 4 $

Thanks CAN


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## cbc1 (27 January 2013)

*Re: SPI nooby questions.*

All part of the cycle,

Sometimes the different delta will work for me as well as against me


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## Trembling Hand (27 January 2013)

*Re: SPI nooby questions.*



cbc1 said:


> All part of the cycle,
> 
> Sometimes the different delta will work for me as well as against me




Yeah .... ripper.

the other thing being if its a close hedge then what are you trading? long XJO short SPI  synthetically you are flat? What bit are you long?


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