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HL Camp Reviews | 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 prices you pay for SPY put and call options, the bids and offers you see on your screen, are 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 16 to 31 seconds, giving you ample time to get your orders working 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" or "they're trading off of total BS".

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" and any imbalance in the two prices can cause program buying or program selling. Over the past 20 years or so, the S&P 500 E-mini contract (ES) has become more important. That is especially true for algorithm trading and high frequency trading.

Thank you for your interest in spoos and our firm. And remember, if you do not have ES 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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