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Selling Options on Futures?
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Selling Options on Futures?

  #1161 (permalink)
10 out of 10
Sacramento, CA
 
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Favorite Futures: Futures options
 
eudamonia's Avatar
 
Posts: 310 since Jul 2010
Thanks: 299 given, 424 received

Getting a nice quiet pullback in wheat before the 11 CST crop report. I suspect we will see some increased volatility and higher premiums after 11. Might be a good time to sell some more calls.

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  #1162 (permalink)
Trading Apprentice
Medellin
 
Futures Experience: Beginner
Platform: non
Favorite Futures: options in futures
 
Posts: 32 since Apr 2012
Thanks: 36 given, 12 received

Commissions and fees

I started about a year ago selling options on futures. The commission my trader was initially charging was $22 per option plus floor fees per side. A ton of money. ....I have been negotiating the commissions down as I get some knowledge and sell more options to the point that I am paying now $ 5 plus floor fees per side. Last month I sold or bought back 27 options for a total of $416 in commissions and fees. Still too much money, according to what I read here.

I went Option Express but they donīt take accounts from Colombia. Question: Do you have any suggestions as to where or how can I reduce the commissions and fees I am paying at the moment?

Thanks for the feedback.

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  #1163 (permalink)
Trading for Fun
Houston, Texas
 
Futures Experience: Advanced
Platform: Interactive Brokers, OptionsXpress
Broker/Data: Options Express
Favorite Futures: Options on Futures
 
MJ888's Avatar
 
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alfredoe View Post
I started about a year ago selling options on futures. The commission my trader was initially charging was $22 per option plus floor fees per side. A ton of money. ....I have been negotiating the commissions down as I get some knowledge and sell more options to the point that I am paying now $ 5 plus floor fees per side. Last month I sold or bought back 27 options for a total of $416 in commissions and fees. Still too much money, according to what I read here.

I went Option Express but they donīt take accounts from Colombia. Question: Do you have any suggestions as to where or how can I reduce the commissions and fees I am paying at the moment?

Thanks for the feedback.

When it comes to strictly fees, in my opinion, Interactive Brokers has the lowest fees. My rate was $2.32 FLAT for any commodities option traded. There were no platform fees, overnight fees, or exchange fees. Just one flat $2.32

But the catch with Interactive Brokers is that their margin requirements are much much much higher than most places, probably one of the highest I've seen, at least here in the United States.

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  #1164 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
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Wow! Wheat down 50 cents . I remember when the limit moves were 12 cents. Haven't read the crop report but I can guess what it said.....

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  #1165 (permalink)
Trading Apprentice
Medellin
 
Futures Experience: Beginner
Platform: non
Favorite Futures: options in futures
 
Posts: 32 since Apr 2012
Thanks: 36 given, 12 received


MJ888 View Post
When it comes to strictly fees, in my opinion, Interactive Brokers has the lowest fees. My rate was $2.32 FLAT for any commodities option traded. There were no platform fees, overnight fees, or exchange fees. Just one flat $2.32

But the catch with Interactive Brokers is that their margin requirements are much much much higher than most places, probably one of the highest I've seen, at least here in the United States.

Thanks MJ88, I will check with Interactive Brokers....

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  #1166 (permalink)
10 out of 10
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eudamonia's Avatar
 
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Yeah didn't get a chance to add to my wheat calls sadly.

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  #1167 (permalink)
Market Wizard
Cleveland, OH
 
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Cotton margin rising 23% on Monday.

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  #1168 (permalink)
Market Wizard
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Beginning April 8, electronic and floor trading hours for CBOT Corn, Soybeans, Wheat, Soybean Meal, Soybean Oil, Rough Rice, Oats, and KCBT Wheat futures and options, plus all related CBOT and KCBT calendar spread options and inter-commodity spread options, will be amended as follows:

Sunday to Friday, electronic trading from 7:00 p.m. to 7:45 a.m. CT
Monday to Friday, break in electronic trading from 7:45 a.m. to 8:30 a.m. CT
Monday to Friday, floor and CME Globex trading from 8:30 a.m. to 1:15 p.m. CT

Daily settlements for CME Globex and floor trading of these products will be based on market activity at or around 1:15 p.m. CT each day.

CME Group Announces Reduced Grain and Oilseed Trading Hours in Response to Customer Outreach - CME Investor Relations

So closed for 45 minutes in the am and closing earlier in the day.

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  #1169 (permalink)
Market Wizard
Cleveland, OH
 
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Very interesting videos of a VERY successful option seller. 30-50% ROR per year.

Host is founder of TOS. Tastytrade video series.

Part 1. 24 minutes
Trader - made $XX profit in 3 years option trading - YouTube

Part 2. 51 minutes
OPTION TRADER makes $XX PROFIT in the NDX, SPX & RUT - Her STORY Uncovered - YouTube

Summary is that she sells stock index options about 17% OTM at 56 DTE. About 250-270 points on ES puts. That looks to be about a 0.0200 Delta or lower.

Only one losing month the last 2 years.

Definitely worth your time to watch. If this doesn't make you excited about selling options nothing will.

Thanks to @lrfsdad for linking to these videos in another thread.


Last edited by ron99; March 29th, 2013 at 05:06 PM.
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  #1170 (permalink)
Elite Member
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ron99 View Post
Very interesting videos of a VERY successful option seller. 30-50% ROR per year.

Host is founder of TOS. Tastytrade video series.

Part 1. 24 minutes
Trader - made $XX profit in 3 years option trading - YouTube

Part 2. 51 minutes
OPTION TRADER makes $XX PROFIT in the NDX, SPX & RUT - Her STORY Uncovered - YouTube

Summary is that she sells stock index options about 17% OTM at 56 DTE. About 250-270 points on ES puts. That looks to be about a 0.0200 Delta or lower.

Only one losing month the last 2 years.

Definitely worth your time to watch. If this doesn't make you excited about selling options nothing will.

Thanks to @lrfsdad for linking to these videos in another thread.

Everyone in this thread needs to watch these videos.


OK..So, thinking in terms of the SPX:

Her initial starting point is 100 points away then 12% further out from that. (5% probability of going ITM)
Sell side is PUT oriented but will look at CALL premiums from time to time
About 56 DTE
15% profit target per trade (for the 56 day period)
Stick with the plan

The only thing that raises a flag is the high % or capital used...up to 75%. Leaves only 25% cash on hand.

I traded my first corn contract about 18 years ago. I would hate to start my trading career selling premium uncovered and not knowing the risks, emotions, money money management, etc. that are involved with it much less any trading method. Read read read...Learn learn learn.

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