What are the advantages of derivatives on ETFs?
On the one hand, futures and options on ETFs provide an opportunity for an optimum implementation of individual trading strategies. In this connection, attention should be drawn to the comparatively small contract transaction value (and, by extension, a lower capital commitment) compared to index products. On the other hand, options and futures on ETFs provide arbitrage and trading possibilities between the derivatives and cash market (ETFs and the underlyings of the index). As opposed to conventional index derivatives (by analogy to the existing stock options), futures and options on ETFs are structured with physical delivery. This is particularly interesting for market participants intending to reinvest in the corresponding ETFs after the expiry date. By building up short positions, investors can also very easily implement a trading strategy that reflects their anticipation of a declining market. Further information on derivatives on ETFs can be accessed on the websites of Eurex.
On the one hand, futures and options on ETFs provide an opportunity for optimum implementation of individual trading strategies. In this connection, attention should be drawn to the comparatively small contract transaction value (and, by extension, a lower capital commitment) compared to index products. On the other hand, options and futures on ETFs provide arbitrage and trading possibilities between the derivatives and cash market (ETFs and the underlyings of the index). As opposed to conventional index derivatives (by analogy to the existing stock options), futures and options on ETFs are structured with physical delivery. This is particularly interesting for market participants intending to reinvest in the corresponding ETFs after the expiry date. By building up short positions, investors can also very easily implement a trading strategy that reflects their anticipation of a declining market. Further information on derivatives on ETFs can be accessed on the web sites of Eurex.
