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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,720 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

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Selling Options on Futures?

Old April 12th, 2013, 05:53 PM   #1321 (permalink)
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ron99 View Post
A word of warning. When markets get crazy like they are today, margins could be raised by both the exchanges and the FCM/brokers. So keep plenty of excess right now.

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.

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Old April 12th, 2013, 06:19 PM   #1322 (permalink)
Market Wizard
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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.


Last edited by ron99; April 12th, 2013 at 06:31 PM.
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Old April 12th, 2013, 06:26 PM   #1323 (permalink)
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eudamonia View Post
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.

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.

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Old April 12th, 2013, 06:43 PM   #1324 (permalink)
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ron99 View Post
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.

Good to know. When are SPAN margins recalculated daily? Is it after the close, next morning, or something else?

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Old April 12th, 2013, 06:58 PM   #1325 (permalink)
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Futures Edge on FIO
New SPAN margins are available usually 7pm ET for the next day. Most brokers and FCMs have the new margins available in the middle of the night.

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Old April 13th, 2013, 10:33 AM   #1326 (permalink)
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opts View Post
Ron....You read my mind on what I was looking for and thinking about...So much that I haven't even been looking at much else lately ... I am looking at a trend following (re-entry with selling options) idea with the ES. That's some of what I previously mentioning as far as selling the weeklies. Still 'looking' but thanks again for looking back at this. I needed some 'safe zone' information.

I'm off to Colombia to see my lady all next week so I'll be out of the loop for a while. Hoping she gets her visa in the next few months. Still holding Silver puts and Crude calls that should expire worthless soon.

Hellofa line of thunderstorms heading through here tonight. Be safe everyone and trade well....

'Chris'

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.

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Old April 13th, 2013, 01:15 PM   #1327 (permalink)
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I just have on low risk stuff and check them with a phone app.

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Old April 14th, 2013, 11:11 AM   #1328 (permalink)
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gigi View Post
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.

Cheers!

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Old April 14th, 2013, 04:46 PM   #1329 (permalink)
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britkid99 View Post
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.

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?

So beware anyone thinking of selling ES puts now.

Brit

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Last edited by britkid99; April 15th, 2013 at 08:11 AM.
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Old April 15th, 2013, 12:27 AM   #1330 (permalink)
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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.

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