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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:567,971 / 5,727
Last Reply:22 Hours Ago (12:40 PM) Attachments:642

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Selling Options on Futures?

Old March 19th, 2013, 11:49 AM   #1061 (permalink)
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MJ888 View Post
Another point that I should mention about my stop loss on strangles is I do not exit during the day should the premium double, it needs to CLOSE at double or more and then I will make arrangements to exit during the next regular trading session should it still be trading at double or more of what I sold at.

Thanks for that MJ.

I like the principle of waiting for the Close before deciding to exit your position,and I did that when I used to swing trade stocks. I'm just not sure if I'm mentally disciplined enough to be able to sit through the kind of movements that can be expected in Futures Options. And I don't have the historical data to look back at the potential losses that might have happened to make an informed decision.

Would someone with the data be able to check what happend to premiums for, say, a 120/100 strangle for CLN11 on 05/05/11 (when the underlying dropped about nine dollars ) as an example?

Thanks,

Chris

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Old March 19th, 2013, 11:53 AM   #1062 (permalink)
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MGBRoadster View Post
a 120/100 strangle for CLN11 on 05/05/11

What strikes do you mean? I don't understand 120/100.

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Old March 19th, 2013, 12:18 PM   #1063 (permalink)
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alfredoe View Post
Well MJ888, yes, there is something more frustrating...seeing your premium continue to escalate the next day, like what happened with natural gas last march 15. I waited until next day and the premium went up another 100% in a few hours. I lost what I had done in the 2 previous months....Never again will I let premium go over 100% of what I received, It has happened twice to me. It is called accepting your loses.

Were you too close to ITM? I have NGJ3 450 calls. The premium hasn't increased at all.

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Old March 19th, 2013, 12:38 PM   #1064 (permalink)
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opts View Post
My plan right now has crude and gold to look at first, then wheat. If wheat starts to make a pullback then I'll bump that to the top of the list.

You still looking at wheat? Had a nice pop up this morning. Was able to nab some WK870 calls for decent premium. .875, margin still high at $600.

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Old March 19th, 2013, 02:17 PM   #1066 (permalink)
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ron99 View Post
What strikes do you mean? I don't understand 120/100.

Sorry, I meant a short strangle with a 120 Call and a 100 Put

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Old March 19th, 2013, 02:25 PM   #1067 (permalink)
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MGBRoadster View Post
Sorry, I meant a short strangle with a 120 Call and a 100 Put

Whoa. Doing a strangle that close to ITM like that is asking for big trouble. Never, in a million years, would I do that.

From 5/4/11 to 5/6/11 it went from 2.36 to 6.27. It lost $3,910 in two days. It settled at 5.05. Big loss.

A Jul11 80/140 strangle went from .19 to .61. It lost $420 in two days. It settled at zero. Far OTM you should be able to handle that big futures movement day and end up profitable.

Jul Futures were 109.73 on 5/4/11.


Last edited by ron99; March 19th, 2013 at 02:40 PM.
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Old March 19th, 2013, 07:45 PM   #1068 (permalink)
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eudamonia View Post
You still looking at wheat? Had a nice pop up this morning. Was able to nab some WK870 calls for decent premium. .875, margin still high at $600.

Yup. I'm guessing that the recent price move up can be attributed to the good export news even with the stronger US$. Ron's posted news says nothing but bearish. The little run-up here is on lower volume so I 'see' no reason for a wheat rally here. Right now I'm in crude, silver, and gold. My boat load of gold puts and calls expire on Monday and I like to keep at least a cash:margin ratio of no less than 60:40 so after Monday's GC expiration my trading rules will let me consider wheat.

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Old March 19th, 2013, 08:50 PM   #1069 (permalink)
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Here a couple of trades I put on recently on my IB demo account. I was using Apex but I switched to IB because I am used to their platform. For the margin, however, I am using OptionsXpress as I plan to be using them when I start trading live.

3/15/13
SOLD 5 115C M-CL May 16th Expiry for 0.08
Delta: 0.02
IM: 465 MM: 930

3/17/13
SOLD 5 1250P K-ES May 17th Expiry for 1.55
Delta: -0.03
IM: 333 MM: 666

3/19/13
SOLD 5 2000C N-GC June 25th Expiry for 0.9
Delta: 0.03
IM: 492 MM: 984

I want to sell some 70 puts for CL-M to turn it into a strangle but haven't been able to get filled at my premium. Also I am looking to sell the 1000 ZW-N Calls and 200 KC-N Calls. What are your guys' opinion on the trades and potential trades?

Thanks!

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Old March 19th, 2013, 09:01 PM   #1070 (permalink)
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opts View Post
Yup. I'm guessing that the recent price move up can be attributed to the good export news even with the stronger US$. Ron's posted news says nothing but bearish. The little run-up here is on lower volume so I 'see' no reason for a wheat rally here. Right now I'm in crude, silver, and gold. My boat load of gold puts and calls expire on Monday and I like to keep at least a cash:margin ratio of no less than 60:40 so after Monday's GC expiration my trading rules will let me consider wheat.


I'd keep an eye on the resistance here...just in case.

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