Recent content by Oskeewow

I would add two things: counterparty risk and arbitrage. As we've learned all too well in recent years banks can fail, and when you need your counterparty commitment most is probably when they are least able to comply. CME guarantees you will get your money, and they will make sure they get it...

Thanks, that's what I was hoping for. One other question on stop mechanics, if you don't mind... How does time priority work over different price levels? If there are 1 lots bid at 50, 49, 48, and 47. And I place a stop sell at 49, then you place a stop sell at 50. The 50 bid disappears but...

moka, you can do it either way. The butterfly increases your exposure to the middle leg, so if that happens to be where the pressure is, you will feel the extra pain. With the box, you're more spread out over the curve. But you may find a more tradable market in the exchange-traded butterfly...

Does anybody know if an actual trade is required to trigger a stop? I'm wondering specifically about some of the illiquid/low volume contracts. For example, if I have a stop sell order at a price of 50.00, and the contract goes offered at 50.00, and keeps getting offered lower before finally...

Sure, it's less capital to put on 1000 butterflies than 1000 outrights, but depending on how your broker manages the margin credit, you might at times need the capital for that many spreads or occasionally the outrights, depending on how you plan to execute. The common spreads and flies are...

As JS said, you can buy and sell consecutive year spreads. Or more generally, pick what size spread you want (3mo 6mo, 12mo, etc), and then how many months between the spreads. In the example above, you have 12 mo spreads (Dec12 - Dec13), 3 mo apart (Dec to Mar). In either parameter, more...

You can get creative with butterflies, condors, or other "boxes" - spread one spread against the next. Just be careful as commissions go up and volatility goes down. Or if you want to use options, it is uncommon (but definitely not unheard of) to see a calendar "twist" without a significant move...