HedgeStreet cuts volume 90% - The press release pros drop the ball

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20060711005532&newsLang=en

The headline actually says they now have $100 contracts, up from $10 previously. This is a strange shift for a company that already has issues with liquidity across most of their contracts. Bigger contract sizes are discouraging for most small investors, and HedgeStreet doesn’t currently have enough contracts trading to go after the bigger guys who would want to trade larger sizes.

"We've…designed contracts specifically intended to provide members…new profit opportunities and greater flexibility," said Bill McIntosh, VP Marketing for HedgeStreet. "The $100 payout and the narrower range lead to increased leverage -- for example, in crude oil, a $1 increase in the underlying asset equates to a $10 payout."

Mr. McIntosh seems to think that larger contract sizes offer greater flexibility for traders– they don’t. And also that trading larger sizes is the same as an increase in leverage, which is isn’t. Just like if I’m holding 100 shares and they go up $1, I’ll make a $100. But if I’m holding 1,000 shares I’ll make $1,000. That’s just more shares not more leverage.

The release also mentions a simplified fee structure, which is the only good news here but is buried at the bottom.