boony

Hmmmmmmmmm

Hey thanks guys for the information, both have been very useful. Ive realised that Ive indicated some incorrection information in my initial post by confusing price with index level. Maybe if I explain further it will help you understand the reason of my question. I work in the back office documenting OTC deals. When we document a deal based on the HSI (for example) we need to specify whether we are refering to either the Options or Futures contract. In the case of the HSI F&O contracts the final level for these contracts are calculated at the same time using the same method on the expiry date (a system of averaging over the last day). This will thus give a slightly different level to the actual Index which is based on the closing price of each share. Pay out is then always based on the difference between the respective futures or options contract on trade date versus expiry date. Contract size is the same for both. As these are To me it seems clear that the final level at expiry will be the same irrespective of contract type ; so why is there a need to specify and differentiate? As OTC deals we are only using these contracts as a reference. The only conclusion that Ive come up with so far is that if a client wishes to unwind or increase a deal during that particular contract month then the trader will base himself on the current level of the respective contract to work out a cost to the client. Hence the need to specify options or futures. Well hope that was clear. Cheers

Cheers for the reply. For the Hang Seng and Nikkei 225 Indices the 3 month Options and Futures contracts expire at the same time ; end of month, so I would expect their final levels to mimic the actual underlying at expiry. Is this correct ? However during the life of each contract I would expect their levels to be completely independant of each other and the underlying. Is this also correct ?

Hi guys, seems to be a bit of activity on this thread so am hoping for some help. Ive posted a question regarding the Hang Seng Futures under the same section. This section could easily be translated to the Nikkei 225 Options and Futures contract. I know the diffeerence between the two styles, however what Im interested in finding out is whether their prices will always mirror the underlying (the Nikkei 225 Index)? If they do not why is this, and will there also be a difference between the options price and the futures price ? Cheers

Hi all, at last somewhere I can find some info. My managers have no idea and Ive had so many different replies and Im really really hoping to get to the bottom of this as its driving me nuts..... Got a few questions regarding the Hang Seng Option or Futures contracts. I know the difference between the two but its the actual determination of the final price which I dont get (and can't find). 1) can these two contracts expire on the same day ? 2) if they expire on the same day will they have the same final price ? 3) will the actual closing price of the exchange be the same as either (or both) of the above ? If you are unaware of the Hang seng then another market would so for an example. Cheers all !