Selling Options on Futures? (Page 102) - Options on Futures | futures.io
futures.io futures trading
 

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures


Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,597 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.


You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike
     

Reply
 642  
 
Thread Tools Search this Thread

Selling Options on Futures?

Old March 14th, 2013, 11:19 AM   #1011 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,323 since Jul 2011
Thanks: 634 given, 3,903 received
Forum Reputation: Legendary

One thing that needs to be pointed out is that only doing deltas <0.0300 is not universal over all commodities. Some like CL you need to be at an even lower delta. Some like SB you need to do higher deltas because there are none worth doing at <0.0300. They are at .01 or .02 and most of the time no bids.

Reply With Quote
     

Old March 14th, 2013, 12:22 PM   #1012 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,323 since Jul 2011
Thanks: 634 given, 3,903 received
Forum Reputation: Legendary


opts View Post
Ron..I was wondering why you were in agreement with the 80 puts. The first thing I thought was wow...these are a little close.

Only a few $s movement down and the premium on these can go up very fast. If 90 is broken watch these like a hawk. This is a major support area...

That's what happens when you try to squeeze in an answer to a post when you are pressed for time.

Reply With Quote
     
The following user says Thank You to ron99 for this post:
     

Old March 14th, 2013, 12:56 PM   #1013 (permalink)
10 out of 10
Sacramento, CA
 
Futures Experience: None
Platform: None
Broker/Data: OX and DeCarley
Favorite Futures: Futures options
 
eudamonia's Avatar
 
Posts: 310 since Jul 2010
Thanks: 299 given, 423 received


Thanks for posting that Ron. I'm trying to pick up some 22 calls in Sugar which have a delta of -0.04 but the volume is pretty light. 21s would be easier to pick up but I'm a bit nervous that those may be too close.

I agree the 80s look a bit scary on Crude. I would love to pick up some more at 70 but that may be difficult.

Reply With Quote
     

Old March 14th, 2013, 01:13 PM   #1014 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,323 since Jul 2011
Thanks: 634 given, 3,903 received
Forum Reputation: Legendary


eudamonia View Post
Thanks for posting that Ron. I'm trying to pick up some 22 calls in Sugar which have a delta of -0.04 but the volume is pretty light. 21s would be easier to pick up but I'm a bit nervous that those may be too close.

I agree the 80s look a bit scary on Crude. I would love to pick up some more at 70 but that may be difficult.

SBK3 21s at .0700 delta are probably too risky.

When SB is down to 33 DTE there pretty much aren't any low risk options left to trade. You need to move to the next set of options. June SB has no OI for calls above 21. So then you move to July.

SBN3 24 or 25 calls will get you about 3.0% per month ROI depending on your fees and margin. You'll need an up day in futures to get buyers of those options.

Reply With Quote
     
The following user says Thank You to ron99 for this post:
     

Old March 14th, 2013, 01:51 PM   #1015 (permalink)
10 out of 10
Sacramento, CA
 
Futures Experience: None
Platform: None
Broker/Data: OX and DeCarley
Favorite Futures: Futures options
 
eudamonia's Avatar
 
Posts: 310 since Jul 2010
Thanks: 299 given, 423 received

Futures Edge on FIO
Any thoughts on TYM13 puts? The market has been sideways to up and the seasonals favor the long side for the next few months. Was looking at the 124 and 125 puts. Could potentially get about 3% per month depending on cost and fills.

Reply With Quote
     

Old March 14th, 2013, 02:06 PM   #1016 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,323 since Jul 2011
Thanks: 634 given, 3,903 received
Forum Reputation: Legendary

I have never traded TY.

Reply With Quote
     

Old March 14th, 2013, 06:44 PM   #1017 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
Posts: 233 since Aug 2012
Thanks: 29 given, 107 received

Interpretations:

I took this info from Barchart.com

Wheat had a nice move up so I watching. If you scroll all the way to the end of the listed options for a certain month you will see the following:

May Contract Options 43 days to expiration close today..call it 725
Call Premium Total: $52,768.75
Put Premium Total: $163,881.25
Call/Put Premium Ratio: 0.32

Call Open Interest Total: 77,813
Put Open Interest Total: 52,600
Call/Put Open Interest Ratio: 1.48

Close today..call it 725. Real quick the 625 puts are at $87.50 and the 625 calls are at $5,068.75. The 830 (not 825's listed) puts are at $5,418.75 and the 830 calls are at $162.50. Calls outnumber Puts 1.48:1 but the put premium total is about 3x the call premium total.

Here is July, close at 720 with the close the same ratios:

July Contract Options 99 days to expiration
Call Premium Total: $36,387.50
Put Premium Total: $165,937.50
Call/Put Premium Ratio: 0.22

Call Open Interest Total: 60,260
Put Open Interest Total: 46,588
Call/Put Open Interest Ratio: 1.29

I am thinking that the call premium total is lower than the put premium total, even with calls having a higher OI, because there are more puts being held closer to the actual contract price. Most of the calls being held are further out. Is this telling me that most of these calls are bought (not sold by 'us') as long shots hoping that price will rise a lot with call buyers getting in the game on the cheap..hoping? And, the better chances are with the puts being held closer to the actual contract price? I just want to tell myself that i am seeing this correctly and if there is a readable trend here. For instance, the smart money is following the down trend. Now that I think about it I can look at my OX chain that shows the OI/VOL for each strike.....and that's what it looks like.

Just looking for an edge....

Reply With Quote
     

Old March 14th, 2013, 06:45 PM   #1018 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
Posts: 233 since Aug 2012
Thanks: 29 given, 107 received


ron99 View Post
That's what happens when you try to squeeze in an answer to a post when you are pressed for time.

Roger that...I have forgotten to read directions on more than one occasion....

Reply With Quote
     

Old March 14th, 2013, 07:17 PM   #1019 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,323 since Jul 2011
Thanks: 634 given, 3,903 received
Forum Reputation: Legendary


opts View Post
I am thinking that the call premium total is lower than the put premium total, even with calls having a higher OI, because there are more puts being held closer to the actual contract price. Most of the calls being held are further out. Is this telling me that most of these calls are bought (not sold by 'us') as long shots hoping that price will rise a lot with call buyers getting in the game on the cheap..hoping? And, the better chances are with the puts being held closer to the actual contract price? I just want to tell myself that i am seeing this correctly and if there is a readable trend here. For instance, the smart money is following the down trend. Now that I think about it I can look at my OX chain that shows the OI/VOL for each strike.....and that's what it looks like.

Just looking for an edge....

With a commodity like wheat there are a lot of commercial companies hedging wheat. If you are a buyer of wheat, for bread, cereal, etc., you would buy calls to protect yourself from a large price increase. I suspect that is why the calls are still being held even though they are far OTM.

The opposite for puts. If you are a seller of wheat you buy puts to protect against a price drop. If you bought wheat at a fixed price you might buy puts to cover yourself if the price dropped so that your competition, who might not have contracted ahead, doesn't have a large price advantage over you.

So the buyers of options aren't trying to make a profit on the position. They are buying options for insurance against a price movement against them.

The put premium total is higher because the price of wheat dropped and the put buyers are closer to ITM.

I don't know if you can glean any tradeworthy info from that data.

Reply With Quote
     
The following 3 users say Thank You to ron99 for this post:
     

Old March 14th, 2013, 07:19 PM   #1020 (permalink)
10 out of 10
Sacramento, CA
 
Futures Experience: None
Platform: None
Broker/Data: OX and DeCarley
Favorite Futures: Futures options
 
eudamonia's Avatar
 
Posts: 310 since Jul 2010
Thanks: 299 given, 423 received


Yeah I've been checking out wheat as well now that we've had a few up days. The current market is down, the market is in line with seasonals, everything looks good to my eye.

Was thinking WK900 calls would keep me safe even if we go to 850 (about 4% ROI). Not really good with holding any longer than that due to the seasonal tendencies of wheat.

Reply With Quote
     

Reply



futures.io > Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)
 

NinjaTrader 8: Features and Enhancements, Tips and Tricks

Dec 6
 

Al Brooks: Stop Losing when a Good Trade goes Bad, Correcting Mistakes

Elite only
 

Trading Technologies: Algo Design Lab hands-on

Dec 13
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Crude Oil (CL) futures inverse pairing options Big Mike Commodities Futures Trading 8 December 12th, 2013 12:00 PM
Recommend futures, options Broker? sam1197 Brokers and Data Feeds 17 March 27th, 2013 01:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 05:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 01:40 PM
Zen-Fire Futures options tici88 Brokers and Data Feeds 1 July 30th, 2011 10:16 AM


All times are GMT -4. The time now is 08:48 PM.

Copyright © 2016 by futures.io. All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
 
no new posts

Page generated 2016-12-05 in 0.14 seconds with 20 queries on phoenix via your IP 54.158.83.210