Q&A  |  MAY 2006

Q&A by Don Bright

Stocks & Commodities V. 24:5 (92): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. UNDERSTANDING SPOOS PREMIUM I have been researching the PREM (“premium”) or spread between the SPOOS and the S&P cash index. I am trying to understand it better to help in speculating day-to-day market direction. Can you shed some insight into this?—Argula Good question about a very valuable tool that is necessary for every trader’s toolbox. First off, the Standard & Poor’s 500 spot price, generally reflected with a symbol of SPX, is the actual index price for all 500 stocks (just like the Dow Jones Industrial Average is for the Dow 30 stocks). The SPOOS, as we call them, are the S&P 500 futures contract, interchangeable with the e-mini contract (smaller contract based on same 500 stocks).

by Don Bright