has to depend on liquidity though... you wouldn’t hedge if the market were 1% wide right?
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ok, but they reference the same underlying basket of stocks... that is the real volume, not whatever prints on some etf or futures contract. ivv has similar liquidity to spy (even though volume is way lower) b/c it can be created/redeemed for the same underlying names
Sure, they track. But where does price discovery happen? When there's a big news print, do market participants rush to trade stocks, and that causes futures to move? Absolutely not. They just pile into futures because that is way easier, and stocks follow.
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People get hung up on the fact that futures are a derivative instrument and completely ignore the fact that the futures market is where almost all of the action is. The level of the index tracks futures, not the other way around.
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it doesn't seem like a derivative to me, everything else is a derivative of /ES. /ES is the underlying.
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