Trading The Emini

option premium on ES vs SPX?

I have been using options on SPX, and also SPY

<< is 50, so I would have to sell twice as many ES calls
as SPX to have the same risk/reward,>>>

right,

<< I would collect 2x 2.90 = 5.80 in premium vs. 4.30 for the SPX,
a signicant difference...this does not seem right...>>>

It is not right.

If you sold 2 ES option contracts at $2.90 you would collect $2.90 x 50 x 2 = $290
If you sold 1 SPX option contract at $4.30 you would collect $4.30 x 100 x 1 = $430

—–

There are significant differences between the SPX and the ES options.

The SPX options are European-style (cannot be exercised prior to expiration) and cash settled.

The ES options are American-style (can be exercised prior to expiration) and, for serial months such as April, require the delivery of an ES futures contract for settlement.

—–

It appears there are some other differences which may be significant, such as different margin requirements and different trading hours, but since I do not trade futures or options on futures I will not try to elaborate further.

If you want to pursue this question further I suggest you go to the Elite Trader “Options” message board at

http://www.elitetrader.com/vb/forumdisplay.php?s=84f99e358b977eb6dc203d886cd6825c&forumid=12

where I know you will find people who have traded SPX options, ES futures and ES options and can probably give you much more extensive answers.

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