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Selling Options on Futures?
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Selling Options on Futures?

  #1331 (permalink)
Trading for Fun
Reno, USA
 
Futures Experience: Intermediate
Platform: esignal
Favorite Futures: Oil
 
Posts: 70 since Jul 2011
Thanks: 14 given, 9 received

Ron,

Given how the implied volatility has gone up on both /CL and /GC why would you not consider selling deep OTM calls now then get out when things settle down?

Just asking for my ongoing education.

Thanks

V

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  #1332 (permalink)
Elite Member
Portland OR
 
Futures Experience: Intermediate
Platform: None
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ron99 View Post
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.

China GDP numbers are out ... Annual growth was 7.7% in the January to March quarter, compared with 7.9% in the previous three months. Analysts had forecast a figure closer to 8%.

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  #1333 (permalink)
Elite Member
Milton Keynes UK
 
Futures Experience: Intermediate
Platform: Investor/RT, Sierra Chart
Favorite Futures: Futures Options, CL
 
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ron99 View Post
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.

Could be new long puts coming in to cover existing long futures, or Goldman Sachs customers who are taking GS downgrades seriously. GS has a history of predicting one thing and then trading in the opposite direction.
The Fed and other Central Banks are likely buyers too at bargain prices too.

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  #1334 (permalink)
Elite Member
Milton Keynes UK
 
Futures Experience: Intermediate
Platform: Investor/RT, Sierra Chart
Favorite Futures: Futures Options, CL
 
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vmaiya73 View Post
Ron,

Given how the implied volatility has gone up on both /CL and /GC why would you not consider selling deep OTM calls now then get out when things settle down?

Just asking for my ongoing education.

Thanks

V

Cos you won't get more than $20 for 1820 and above June calls and the margins have likely gone up making for a miserly ROI. The price dropping has reduced call prices and volatility increased margins so a double whammy on ROI.

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  #1335 (permalink)
Market Wizard
Cleveland, OH
 
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Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
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britkid99 View Post
Could be new long puts coming in to cover existing long futures, or Goldman Sachs customers who are taking GS downgrades seriously. GS has a history of predicting one thing and then trading in the opposite direction.
The Fed and other Central Banks are likely buyers too at bargain prices too.

Sorry I should have stated that the OI change was just for futures.

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  #1336 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
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Quoting 
Ron,

Given how the implied volatility has gone up on both /CL and /GC why would you not consider selling deep OTM calls now then get out when things settle down?

Just asking for my ongoing education.

Thanks

V


britkid99 View Post
Cos you won't get more than $20 for 1820 and above June calls and the margins have likely gone up making for a miserly ROI. The price dropping has reduced call prices and volatility increased margins so a double whammy on ROI.

What he said. It's a week too late to be selling calls.

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  #1337 (permalink)
Market Wizard
Cleveland, OH
 
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Barrington View Post
China GDP numbers are out ... Annual growth was 7.7% in the January to March quarter, compared with 7.9% in the previous three months. Analysts had forecast a figure closer to 8%.

While the China numbers are bearish, GC crashed on Friday. Today's GC crash has more to do with what happened Friday and whatever triggered the new selling of futures.

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  #1338 (permalink)
Market Wizard
Cleveland, OH
 
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9:08 EDT - "These usually don't end very quickly," George Gero says of gold's
plunge. "Buyers may take a wait-and-see attitude" as gold futures crumble
nearly $200 a troy ounce in the space of two trading days. Gero should know.
He's been trading gold in New York since the futures contract was launched on
the same day US personal ownership of the metal was legalized in December 1974.
Now a vice president with RBC Capital Markets, Gero says: "In 40 years of
watching gold I have not seen anything like this."

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  #1339 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,649 since Jul 2011
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OX raised GC margins from 20% over SPAN to 30% over. SI from 10% to 20%. NG from 20% to 30% over.

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The following user says Thank You to ron99 for this post:
 
  #1340 (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


To anyone interested, I am trying to sell off my remaining LONG May CL 78 Puts which were cover for a calender.
Got 3 away at 0.04 today and have orders in for 1 @ 0.05 and 2 @ 0.09

Thought these were doomed to expire worthless but drop in CL has sparked some interest.
Pretty good returns with just 2 more days left?

Have I traded with you again Ron? Anyway watch out if interested.

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