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What are Spoos?

Over ninety percent of the stockbrokers that trade SPY puts and calls for their own account and their client's accounts do not know what a spoo is. They don't know a spoo contract from their employment contract.  Do you?  The actual price you pay for SPY put and call options, the bids and offers you see on your screen, is determined not by the SPY price, but by the price of the spoos.  In addition, the spoos prices precede the SPY cash price by about 1 to 2 minutes, giving you ample time to get your orders to the floor and get the best prices of the day. By knowing in advance what the spoos will do, you greatly increase your odds of making more money on SPY put and call options.

So, what is a spoo?  It's real simple. A spoo is a contract that trades on the Chicago Mercantile Exchange.  It is the S & P 500 Contract.  And a spoo is the current most active month trading, either March, June, September, or December.  The symbol for the September contract is SPU, thus the name "spoo". But the other months are called spoos too. Guess it was to hard to say SPZ's or SPM's or SPH's. Funny thing is that the term did not come from the the folks actually trading them in Chicago. It originated in the XMI pit on the American Stock Exchange in New York to describe how the XMI was trading; as in, "they're trading off of the spoos" verses "they're trading off of the bonds", or "they're trading off of the cash".

Program trading is based on the spoos; plus, the difference between the spoo price and the actual S&P 500 Index (cash) price. That difference is the "spread" or "premium" (PREM) and any imbalance in the two prices is what causes program buying or program selling.

Thank you for your interest in spoos.  Even if you decide not to subscribe to our service directly, the enclosed information will help you understand our informational summaries published here on our web site and other sites each morning.  But you may want to subscribe, the best SPY traders in the world do and you could probably use a level playing field for a change. And remember, if you do not have the spoos on your quote screen you are at a great disadvantage.  Kind of like playing golf with out any woods. You can do it, but not very well.

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