> The second cash sweep that will happen actually happens overnight. You will see this listed as "Cash Sweep" in ThinkorSwim. This overnight sweep is used to get the futures cash balance high enough to cover the exchange's initial requirement which is posted by the CME. As of today, for /MES the exchange initial requirement is 2,412.3 per contract for longs, however this does change every day. The overnight sweep moves the cash, so the futures cash balance equals the exchange initial requirement.
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### Futures instead of stock
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Futures let you buy (or sell) into indexes like the S&P 500 and Russell 2000. A long /ES or /MES futures position should be equivalent to holding SPY shares. It is essentially an ETF without fees, however the longer-dated future price will be higher than the current index. There is an inherent loan when you long a future, and that interest is baked in.
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I have been replacing some of my ETF positions with futures. For example, US small cap can be replaced with /RTY or /M2K. Using futures allows me to leverage easily without needing any margin loan. For example if my rebalancing requires I put $10k into US small cap, instead of buying the SCHA ETF, I might instead buy 1 /M2K future, which is currently the same notional value, but costs much less.
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### Representing bonds with futures
The /10Y futures represents the current 10-year treasury yield. From what I understand about bonds, if the current yield is rising, it means newer bonds are worth more than older bonds. i.e. the return on newly issued bonds are greater than older issued bonds. The inverse should also be true.
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Buying BND *might* be equivalent to shorting (selling) /10Y futures. From a portfolio standpoint, bonds are usually included to reduce the volatility. They also give some income, so I'm not yet sure if the short futures position can be considered equivalent. Something to test long term.
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Buying BND *might* be equivalent to shorting (selling) /10Y futures. From a portfolio standpoint, bonds are usually included to reduce volatility. They also give some income, so I'm not yet sure if the short futures position can be considered equivalent. It is something to test long term.