Selling Options on Futures? (Page 119) - 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:569,446 / 5,734
Last Reply:2 Hours Ago (01:01 AM) 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 31st, 2013, 08:12 AM   #1181 (permalink)
Elite Member
Milton Keynes UK
 
Futures Experience: Intermediate
Platform: Investor/RT, Sierra Chart
Favorite Futures: Futures Options, CL
 
Posts: 156 since Jun 2009
Thanks: 74 given, 115 received


opts View Post
Speaking of the SP500....There has been a lot of talk about the market needed to pull back and my 2 cents tells me that it will happen soon.

Bearish divergence showing up with the new highs and volume tapering off. Puts are more expensive now also = more insurance being purchased. North Korea and Cyprus variables always there too....

Also bearish divergence showing on cummulative delta volume (bottom pane). Currently about 100,000 contracts still holding short from the 1525 push down despite price rising 40 points.

Not saying it is imminent as these things take time to play out, the market may want to push those shorties out before rolling over. Could take till Sell in May, or geopolitical events may force it sooner. Either way I think we soon see 1480 again and then maybe 1380 and we wipe out all of this years gains.

Attached Thumbnails
Selling Options on Futures?-es-30-03-2013.jpg  
Reply With Quote
     

Old March 31st, 2013, 09:25 AM   #1182 (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

Timing, timing, timing....One of the main reasons I don't trade contracts any more.

Agree..it'll happen but the tipping point is anyone's guess.

Vader Trader Has been updated. You can skip the intro and go to the results page here Vader Trader but you will miss the new monthly words of wisdom.

It's very difficult to type when a cat is chasing your screen pointer.....

Reply With Quote
     

Old March 31st, 2013, 12:36 PM   #1183 (permalink)
Trading Apprentice
Medellin
 
Futures Experience: Beginner
Platform: non
Favorite Futures: options in futures
 
Posts: 32 since Apr 2012
Thanks: 36 given, 12 received


James Cordier wrote in his latest article, talking about mistakes selling options close to the money: “Just select options that are at least 50% out of the money and preferably 75% to 100% out of the money. This means looking for markets with a little more volatility and being willing to write them further out in time. Remember that you can sell options four, five or even six months out and still take profits in 60-90 days.”

I could not find even one commodity where you could apply even the 50% out of the money, much less the 75-100%, to get at least a $200 premium going further out in time as much as you can. I would like to see just one example.

Reply With Quote
     

Old March 31st, 2013, 12:41 PM   #1184 (permalink)
Elite Member
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,195 since Jul 2012
Thanks: 1,004 given, 3,970 received


alfredoe View Post
James Cordier wrote in his latest article, talking about mistakes selling options close to the money: “Just select options that are at least 50% out of the money and preferably 75% to 100% out of the money. This means looking for markets with a little more volatility and being willing to write them further out in time. Remember that you can sell options four, five or even six months out and still take profits in 60-90 days.”

I could not find even one commodity where you could apply even the 50% out of the money, much less the 75-100%, to get at least a $200 premium going further out in time as much as you can. I would like to see just one example.

Why do you need at least $200 in premium? Everyone I sell gives me less premium than that, and I'm on pace for roughly 40% annual return.

Is your goal a certain $ amount, or a certain % return? That might be the issue here.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Reply With Quote
     

Old March 31st, 2013, 12:54 PM   #1185 (permalink)
Trading Apprentice
Medellin
 
Futures Experience: Beginner
Platform: non
Favorite Futures: options in futures
 
Posts: 32 since Apr 2012
Thanks: 36 given, 12 received

Futures Edge on FIO

kevinkdog View Post
Why do you need at least $200 in premium? Everyone I sell gives me less premium than that, and I'm on pace for roughly 40% annual return.

Is your goal a certain $ amount, or a certain % return? That might be the issue here.

Show me an example where you can get 100% out of the money pay commissions and fees (in and out) and still make 40% return...

Reply With Quote
     

Old March 31st, 2013, 01:11 PM   #1186 (permalink)
Elite Member
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,195 since Jul 2012
Thanks: 1,004 given, 3,970 received


alfredoe View Post
Show me an example where you can get 100% out of the money pay commissions and fees (in and out) and still make 40% return...

Here are all the trades I have taken this year (I started Feb 1). I didn't calculate the X% out of the money these options initially were (to be honest, I don't even know what this means - maybe someone could provide an example), but all these were around .02 delta.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).




When you take all these together, from 2/1 to 5/16 the annualized rate of return is around 36.7%.

Of course, I have to start selling a bunch more soon to keep this rate of return up.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Reply With Quote
     
The following 3 users say Thank You to kevinkdog for this post:
     

Old March 31st, 2013, 01:25 PM   #1187 (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


alfredoe View Post
James Cordier wrote in his latest article, talking about mistakes selling options close to the money: “Just select options that are at least 50% out of the money and preferably 75% to 100% out of the money. This means looking for markets with a little more volatility and being willing to write them further out in time. Remember that you can sell options four, five or even six months out and still take profits in 60-90 days.”

I could not find even one commodity where you could apply even the 50% out of the money, much less the 75-100%, to get at least a $200 premium going further out in time as much as you can. I would like to see just one example.

alfred:

Remember, you are reading a trading method that someone else trades. Like Kevin posted, there are no rules that say you must trade Cordier's way. Looking at my trades so far, with all of the fees and commissions taken into consideration my average premium collected per option was about $30. I'm up a little over 17% on my account per the close of March. I read the book also and assumed it was THE way to do things but there are too many ways that you can sell options. It's a matter of what fits your trading style and how it adapts to you; not how you adapt to it.

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

Old March 31st, 2013, 01:32 PM   #1188 (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

If anyone watched the video links that Ron posted, and if you have not already...just do so.

But, I am wondering how she determined 56 DTE, 100 points away, then 12% after that???

If she used some backtesting methods then that's fine with me. I'm just curious as to how she came up with these variables.

I've been looking at the ES options and even with these parameters there still looks to be decent premium with less than 56 DTE. That brings up the question of if the market goes against you within the first week or so and you want to sell the other side, would there be enough premium remaining to sell the other side given the shorter DTE if you were looking at options with 40 or 35 DTE? Did I say that correctly....uhhh...yes.

I'm guessing she is using 56 DTE (+/-) for the sole purpose that if the market does go the other way hard in the first 10 days or so there is still a good month left (decent premium) to sell the other side. However, it sounds like this is rarely done either way.

Any thoughts?

Reply With Quote
     

Old March 31st, 2013, 02:00 PM   #1189 (permalink)
Trading Apprentice
Medellin
 
Futures Experience: Beginner
Platform: non
Favorite Futures: options in futures
 
Posts: 32 since Apr 2012
Thanks: 36 given, 12 received


kevinkdog View Post
Here are all the trades I have taken this year (I started Feb 1). I didn't calculate the X% out of the money these options initially were (to be honest, I don't even know what this means - maybe someone could provide an example), but all these were around .02 delta.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).




When you take all these together, from 2/1 to 5/16 the annualized rate of return is around 36.7%.

Of course, I have to start selling a bunch more soon to keep this rate of return up.

The trades I checked in the above list, 6 so far, are all below 33% OTM, and some below 20% (too close for me).

That is why I asked the above question: James Cordier Published in this link Options writing mistakes to avoid (I had not noticed the date, it was part of an email I received today, the premiums were very different then but still the main concept applies. For me, it is impossible to get some meaningful premium even 50% OTM at the moment).

I know, this is not an exact science, I am just trying to get some understanding of his words, I don’t want to start a confrontation…Thanks

Reply With Quote
     

Old March 31st, 2013, 02:04 PM   #1190 (permalink)
Elite Member
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,195 since Jul 2012
Thanks: 1,004 given, 3,970 received



alfredoe View Post
The trades I checked in the above list, 6 so far, are all below 33% OTM, and some below 20% (too close for me).

That is why I asked the above question: James Cordier Published in this link Options writing mistakes to avoid (I had not noticed the date, it was part of an email I received today, the premiums were very different then but still the main concept applies. For me, it is impossible to get some meaningful premium even 50% OTM at the moment).

I know, this is not an exact science, I am just trying to get some understanding of his words, I don’t want to start a confrontation…Thanks


No confrontation here at all. I'm trying to understand you, you are trying to understand me, and we both are trying to understand Cordier. This is a great conversation!

Can you explain your calculation for OTM calculation?



The Cordier article states: "Just select options that are at least 50% out of the money and preferably 75% to 100% out of the money."

I truly have no clue how this is calculated. Is it based on premium? I'm sure it is easy, and I am just being dense.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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)
 

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

Elite only
 

Trading Technologies: ADL hands-on

Dec 13

Normal webinar schedule resumes after the holidays

January

Ernie Chan: Risk Management

Elite only

Dedicated Trading Servers: Advantages/Disadvantages w/sam028

Elite only

An Afternoon with FIO member Massive I

Elite only

Leo Murphy: TBA

Elite only
     

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 03:44 AM.

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 2016-12-09 in 0.16 seconds with 20 queries on phoenix via your IP 50.16.17.16