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What
are Spoos?
Over ninety percent of
the stockbrokers that trade OEX 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 OEX put and call options, the bids and offers
you see on your screen, is determined not by the OEX Index price, but by
the price of the spoos. In addition, the spoos prices precede the
OEX cash price by about 3 to 6 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 OEX 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.
For more information
about program trading and our research, along with answers to the
questions we get asked most often, click here. If
you have additional questions, please give us a call at 561-622-6600 or
send us some email to info@programtrading.com
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 OEX traders
in the country 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.
If you have
comments or suggestions, please email us at:
info@programtrading.com
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