The SP 500 quarterly E-MINI futures contract is the most well traded futures contract globally with a very well Traded Options market on the SP500 as well , trading around 1,600,000 Futures contracts per day. The SP500 futures contract has the futures symbol of ES and trades 23 out of 24 hours on the CME Globex trading platform beginning Sunday Night at 6pm (will vary by 1 hour with daylight saving*) and Ends New York Time Friday at 5pm.* The quarterly contract expires in mid December, March, June and September of each year.
To give you an indication of the actual average daily volume traded for the E-mini futures contract, the ESH3 (the March 23 contract traded an average of 1,682,737 contracts per trading day from the 14 December 22 to the 27 January 23, which is 30 trading days. (Source CME group website). The minimum tick is a ¼ point which is US$12.50. A movement of 1 point in the futures contract is therefore $50. If you are a speculator and not hedging your position and if you have 2,000 contracts and you make 10 points, (2,000 * 10 * 50) then that is 1million dollars gross profit.(brokerage, taxes payable etc would have to be deducted for net profit). Conversely if you lose 10 points then you have lost 1 million dollars. The sword cuts both ways. You live and die by the sword. Timing the market correctly is of paramount importance and is absolutely crucial to being successful.
At specific times during the 23 hour trading session, there are certain of My Proprietary patterns that develop that give a very high probability trade of the ES contract moving in a strong upward or downward direction in the next 8 to 12 hours. That sounds promising except there is still one issue that needs to be addressed and while the anticipated move may eventuate, there is often a sharp move in the opposite direction before the anticipated move eventuates. This is where the Options positions on the ES futures come in, to protect you (Hedge your position) against this temporarily adverse move.
The Futures position with the protection of Options often produce a very profitable trading result. The Opportunity is not always present but it occurs quite often and is very profitable when the pattern develops and you innovatively use a Strategy involving Futures and Options (For Hedging). If you can read the market with a high degree of accuracy YOU HAVE A GREAT PROFITABLE OPPORTUNITY. While not every single trade will work out, as long as you can get the majority correct you will come out way ahead.
Eg. On the 23 FEB 2023 Sell 100 ESH3 March futures at 4020 and Buy 100 At The Money Call options at 4020 with a delta of 0.5 daily for “Upside Protection” for a futures 3980 Profit Target. Generally there are many other Option combinations that can be tailored for protecting the Futures position depending on the profit objectives, Volatility, Probability of Profit etc. Each situation is unique but the same “General Principles” of the option protecting the futures position are applied and the net result of making more money on the futures position than the cost of the option protection results in a very robust profit.
If you are a Family Office Investor, Sophisticated Investor, Hedge Fund or Investment Manager please initially contact me by email with “SP500 Futures and Options” and Your Company Name and Your Details in the subject line if you are interested in the above. Due diligence will be facilitated at the Advances Stages.
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