Which chart selections?

#1

Darrell Martin recommendation of using an derivative chart (SP 500 futures) instead of an derivative of a derivative chart (U 500) for trading on the Nadex has confuse me. The same logic would seem to suggest that using SP 500 index chart between the hours of 9:30 to 16:00 is better than using an chart of the SP 500 Future.

#2

It depends on what you are trading.

SPX is a chart of the S&P 500 Index - You would use this to trade S&P 500 Index options

SPY is a chart of the S&P 500 ETF - You would use this to trade the SPY ETF or the SPY ETF Options

The Derviative US 500 chart is charting the settlment price (last 25 trades average of middle 15 prices). Which basically only helps you as a genearl reference or as of expiration. It does not plot roll over data. It does not plot when Nadex is closed and the future is open and Nadex is not. It does not give you any volume data as its a derivate price not a tradeable instrument (the indicative index that is) so you are missing 1 of the 3 most important things needed when analyzing a chart (VOLUME, Price Action, and Movement Expectations).

ES 12-14 (or Z4)is a chart of the S&P 500 December 2014 futures - You would use this to trade ES futures, ES options, or Nadex US 500 binary or spread options as they follow and are settled on the ES chart

Each chart will vary slightly

Index and ETF charts are not open around the clock like Futures (ie night time after 4:15 PM ET before 9:30 AM Et etc… etc…

So if you look at the wrong chart you will not be looking at the write price.

You will not get volume on the SPX 500 Index chart as you can trade the index - you can trade options on it but ont the index itself so it has NO volume.

You need to be trading a chart of the market that the derivative is derived from. You don’t buy a call on aaple and look at Nestle.

As you can see clearly on the contract specs page Stock Index Contracts

the Nadex US 500 follows the S&P Emini 500 Futures.

So unless you want the wrong price with the wrong chart with half the data and no volume when your trying to make an option decision you want to follow the right chart.

In this case that would 100% not be the SPX 500 Index But the CME S&P 500 Emini Futures