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Thanks for the word of warning. I'm fully expecting margins to hike up a bit after today's rally. Was able to get a decent roll over price and now have full allocated buffer again. Looks like we have major resistance in the 4.5 area and now I've got sufficient breathing room to see how we test that area.
Can you help answer these questions from other members on NexusFi?
I tried something a little different the last month.
On 3/19 I sold 5 ESm3 1000p options for 0.50 or $25 in one of my very low risk IRA accounts. ES was 1542 that day. Delta was .0040. Very low. They were very far OTM (542). 95 DTE
I immediately placed a GTC order to buy them back at 0.10 or $5. Today 2 of them traded.
So I held those 2 for 24 days.
Per contract.
3/19 IM 128 excess 256 If kept to expiration 1.8% monthly ROI. Or 3.4% real ROI per month. Decent but not that great.
4/12 IM 52 excess 104
So if you average the 384 IM + excess when i put them on and the 156 IM + excess when I bought them back you get an average of 270 IM + excess held for that position for 24 days.
I netted 12.88 each. $12.88 / 270 = 4.8% ROI for 24 days or 6.0% for 30 days. That's a real good ROI for something that low risk.
Of course ES went 40 points in my favor so that shortened the time held. But even if I held them 30 days the 4.8% ROI for a month is very good.
I'm sure you could move to a higher strike and do as well. You just wouldn't want to move too high because options about 95 DTE are more volatile since they are closer to ITM.
Some traders in this thread have been selling and then buying back before expiration. I wondered the ROI of that and paying another set of fees vs riding to expiration. It looks good to me. Thanks for teaching me something new.
I'm sure my brokers will be happen to get a lot more commissions.
Yes margins will hike after today's rally. But also what could happen is the CME or OX could raise the margin on futures for NG or any of the other highly volatile commodities.
Margin on front month NG is 2310. OX adds 20% more to 2772.
The CME could raise the 2310 and your options would go up by the same percent.
Or OX could raise their margin multiplier from 20% to 25, 30 or 40%.
Or both could happen.
That is what happens when things get too volatile for them.
Metals and the energies could all do the same thing.
Chris, does that mean that you don't watch the market daily? Just a question for the others as well. If you are going for a break, do you close your positions? I'm a born worrier.
I monitor things every day and I will do the same from Colombia. If I am going to be away from an internet connection for an extended period of time then yes, I close things out or simply plan my trading accordingly so I have no positions open during that time.
As I mentioned in the above post the prior shorts at 1524 have now been pushed out forming a equal high on Cummulative Delta and taking another 20 ES points to do it. The coast is now clear for another push down, I would be expecting at least a 50-100 point move down from here to say 1480-1530. Sell in May (or sooner perhaps) is on the cards again?
Interesting that on Friday when GC was down a lot that OI gained 19k for the GC complex. Jun GC gained 15k. Prices don't appear to be dropping because of liquidation. Someone or someones are hammering it. but there is buying too.
GCm3 traded 10k times in 4 minutes on Sunday night. Lost $30. Something is going on.
CL OI gained 15k Friday. NG +25k.
These are times when I don't add more positions. Not making money on unused cash is better than losing money on cash that is being used.
