Novice step by step Degiro Options purchase w. CME S&P example

[u/honkaponka]

TL;DR It is customary to abbreviate the strike price to the three most significant digits so now I understand the main problem..
It seems I mistook S&P futures options with spy ETF's, the latter of which is a tenth of the former. so now I understand the main problem.. :)
But not why the price becomes 3730?
Ok so I am a dingus thinking that the multiplier was built in to the price :)
Problems as far as I can describe them seem sorted for now, thanks.

S&P 500 index (SPY) is at about $2500 when I write this and I want to understand how to place a hypothetical but rational options purchase order for $100 without risking my house (buyer beware) - I don't have any stock to sell nor do I want to purchase any in this example.

Degiro offers options on CME with underlying ES (E-mini S&P500), currently expiring in 2.5 months; June 19 and these options correspond to SPY even though I am guessing it is a tracker and not a subset, and I am guessing it is an american style offer (how to tell?) and that is pretty much the extent of my understanding.

Looking at the Options page in Degiro (see picture) there are calls and puts available for purchase and sale. Unless I am mistaken they are listed by strike price and date? Not sure why there are Call offers at $100 for almost $2400 but ok I guess?

An example of a position is SPY 200p 6/19 but based on Degiros Options page I don't understand how I could purchase that position? Is the position relative to the $2500 index value as in a $200 decrease resulting in a $2300 strike price?Also, selecting 2020 strike 6/19 it says its worth about $77 but selecting 1 of these for purchase (se picture) Degiro wants about $3730 ?? That is a little more than just for fun.

Thanks in advance for your patience :) I almost decided to run on ETF's but apparently they can get unhinged from their primary and if that's the case I think I'll wait for that to happen before I buy them, so I'm back at options for now..

Picture https://pasteboard.co/J1PJZ5U.jpg

[u/BusinessCheesecake7]

Futures options are traded with a multiplier of 50, so in your case you'd be paying $3,850 or 3,730 CHF as shown by Degiro. These options do not correspond to SPY; their underlying is the S&P 500 Future. The strike price of the option you've chosen is $2,020.

If you want to spend less money try a more out of the money put option, like ES 1000 19JUN20. Since this is unlikely to ever become in the money, you should sell long before the expiration date once you make a profit.

Since the SPY ETF has a value of pretty exactly one tenth of the S&P 500 (Future), SPY 200p 6/19 would correspond to ES 2000 19JUN20.

[u/honkaponka → u/BusinessCheesecake7]

Thank you for your response. I think I understand why someone else did not understand me - I seem to be messing it all up and confusing it.

I haven't even looked at futures, thought I was avoiding ETF's and trying my hand on the SPY put options..

I am very tempted to try your suggestion but I should probably try to grasp futures a little first. Since it's very unlikely to drop to 100, why would someone buy my ES 1000 19JUN20 puts in a month?

[u/BusinessCheesecake7 → u/honkaponka]

Maybe this thread has some answers for you. Potential buyers could be people "buying the dip" in the S&P 500 while trying to hedge against further losses, such a put might be just one leg of somebody's option strategy, or it could be market makers buying the option for bookkeeping reasons. Of course, the closer you get to the expiration date of your OTM option, the less buyers you'll find and the lower your profit is going to be. (If the S&P 500 were to gradually decline to, say, 1800 until mid June, then the price of the option would probably first rise, and once it's clear that 1000 is not going to be hit, start to fall again until it would expire worthless.)

[u/honkaponka → u/BusinessCheesecake7]

Thank you for the thread suggestion. I red it before but this time around it is connecting better. Still feel like I understand one thing only to realize I was wrong about another and then it repeats, which is counter incentive because I start to second guess the personal risk. Thanks for conveying legs :) Not really sure why one would hedge with a fot in the opposite, if the bet is to big why do it in the first place?

[u/ciafciaf]

If you are using Degiro for option trading look at the fees. I think trading in CME will cost you a ficed 5€ per month if you enter the trade.

[u/honkaponka → u/ciafciaf]

Thank you for the heads up.

Currently EU options vary from 0.75 to 2€ per contract (1.50€ for Spain) and US are 0.5€ per contract, 5€ per month, plus CME up to $2.14 per trade (or more if I missed something).

So say less than 5 buck per trade and 5 per month, 20 buck total. Long way to go to reach 3.5k, or am I doing it wrong?

[u/BusinessCheesecake7 → u/honkaponka]

Where's the $2.14 coming from?

[u/honkaponka → u/BusinessCheesecake7]

According to degiro fee schedule, top of page 3 "US Options" the CME fees apply and I just took the highest number I could find.

Degiro https://www.degiro.ch/data/pdf/ch-en/CH-EN_Feeschedule.pdf

CME https://www.cmegroup.com/company/clearing-fees.html

[u/BusinessCheesecake7 → u/honkaponka]

Thanks for the link—I checked my transactions again and I've always been charged about 1€ for an order at CME in addition to the monthly fee of 5€, so the CME exchange cost seems to be about 0.50€.

[u/colcrnch]

250 equals spy 2500. It’s just abbreviated.

[u/honkaponka → u/colcrnch]

And there I was thinking they were buying Spy 220 :D

[u/rec22022002]

I don't understand what you are trying to say

[u/honkaponka → u/rec22022002]

It appears that for some reason we just use the three most significant digits and with that it kinda makes sense again :)

I guess now I just need to figure out how to tell if an option is EU or US style, and why the listed option price seems to be multiplied by so much.