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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,836 / 5,734
Last Reply:Yesterday (01:01 AM) Attachments:642

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Selling Options on Futures?

Old May 19th, 2012, 10:29 PM   #131 (permalink)
Trading for Fun
Huntsville AL/USA
 
Futures Experience: Intermediate
Platform: optionsXpress
Favorite Futures: Options on Futures
 
Posts: 54 since May 2012
Thanks: 80 given, 26 received

My IRA is through Millennium also. I rolled a 401K and a regular IRA to it. I still have a small 401K with work. It is very encouraging to see that you have consistently been successful. I just noticed that OX dropped my commissions from 12.99 to 8.99. I would love for it to be 2.99 but you are doing many times more volume than I do.

I am also primarily focused on the fundamentals but I have been trying to use some TA to time when I enter a trade. How do you time entry?

Are you currently still buying options too?

I appreciate you sharing your experience with us.

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Old May 19th, 2012, 10:43 PM   #132 (permalink)
Trading for Fun
Huntsville AL/USA
 
Futures Experience: Intermediate
Platform: optionsXpress
Favorite Futures: Options on Futures
 
Posts: 54 since May 2012
Thanks: 80 given, 26 received

I didn't know about the switch on softs to electronic trading. I am not sure what kind of impact that will have. Do you expect better fills? Are there any negative impacts?

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Old May 21st, 2012, 11:02 AM   #133 (permalink)
Trading Apprentice
Medellin
 
Futures Experience: Beginner
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Favorite Futures: options in futures
 
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Raven View Post
. I currently have open positions in CL, LH, LC, NG, C, W, CC, SB and GC.

Could you share some of the options you sold, it may be important for us, new in this business.

Thanks,
Alfredo E

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Old May 21st, 2012, 05:44 PM   #134 (permalink)
Trading for Fun
Huntsville AL/USA
 
Futures Experience: Intermediate
Platform: optionsXpress
Favorite Futures: Options on Futures
 
Posts: 54 since May 2012
Thanks: 80 given, 26 received

Here are a few:

5/17/2012 CL SEP 2012 55 Put. @0.07
5/17/2012 CL SEP 2012 65 Put. @0.26
5/8/2012 NG AUG 2012 3.75 Call. @0.017
5/2/2012 W SEP 2012 500 Put. @3.125
5/1/2012 CL SEP 2012 140 Call. @0.21
5/1/2012 SB OCT 2012 17 Put. @0.14
LC AUG 2012 104 Put. @0.675
LH AUG 2012 76 Put. @0.4
W JUL 2012 550 Put. @5.5

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Old May 21st, 2012, 06:14 PM   #135 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
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Futures Edge on FIO

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Raven View Post
My IRA is through Millennium also. I rolled a 401K and a regular IRA to it. I still have a small 401K with work. It is very encouraging to see that you have consistently been successful. I just noticed that OX dropped my commissions from 12.99 to 8.99. I would love for it to be 2.99 but you are doing many times more volume than I do.

I am also primarily focused on the fundamentals but I have been trying to use some TA to time when I enter a trade. How do you time entry?

Are you currently still buying options too?

I appreciate you sharing your experience with us.

Your commission at OX dropped probably because you made more than 40 option trades last month. Did you?
That is where there 1st break in price occurs.
Get the Best Online Trading Value with optionsXpress

As far as timing entry, I don't worry about it too much. I just put them on.

I will try to sell puts and not sell calls right before the 1st of the month. Some commodities (ES, CL) tend to go up on the 1st trading day of the month. (Note: Past performance may not be indicative of future results )

Also I try to sell options at the end of the week or before holidays because the extra day(s) of time erosion works to decrease the premium quickly after I put the option on.

Buying options? Occasionally. Many things need to line up for me to buy options. So I don't do them very often.

Unfortunately, I missed the "Perfect Storm" of option buying opportunities this month.

You could have bought July CL puts on May 1st pretty cheap and then sold then last Friday for HUGE gains. On May 1st the July 85 put was 0.12. On Friday it was 1.01. 742% ROI. In only 17 days. The 90 went from 0.27 to 2.30. 752% ROI. The 95 went from 0.60 to 4.78. 697% ROI. The 100 went from 1.34 to 8.67. 547% ROI. Notice how the ROI was better on the 90 than the 100. But you need a large movement for that to work.

CL & ES had dropped significantly the beginning of May the last 2 years ("sell in May and go away" is the old saying). I was waiting for it but didn't want to put on the long puts before the May 4th employment report in case it was bullish. After the report was out I thought I had missed so much of the move, it was already down 7.67 in 3 days, that I thought I was too late and didn't add any then.

So that's my story of the big fish that got away.

The problem with buying options is that you need a decent size movement and you need to know when it will happen for the premium to gain instead of losing value because of time erosion. That is why selling options works well and buying options is unpredictable.


Last edited by ron99; May 21st, 2012 at 06:35 PM.
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Old May 21st, 2012, 06:25 PM   #136 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,329 since Jul 2011
Thanks: 634 given, 3,909 received


Raven View Post
I didn't know about the switch on softs to electronic trading. I am not sure what kind of impact that will have. Do you expect better fills? Are there any negative impacts?

I'm expecting better fills. There were many times I saw an electronic bid in KC but when I placed my order at the same price and it went to the pit it never got filled.

If you are doing large quantities this might be a negative. But I expect almost all pit traded stuff to just about disappear eventually.

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Old May 21st, 2012, 06:34 PM   #137 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,329 since Jul 2011
Thanks: 634 given, 3,909 received


Raven View Post
Here are a few:

5/17/2012 CL SEP 2012 55 Put. @0.07
5/17/2012 CL SEP 2012 65 Put. @0.26
5/8/2012 NG AUG 2012 3.75 Call. @0.017
5/2/2012 W SEP 2012 500 Put. @3.125
5/1/2012 CL SEP 2012 140 Call. @0.21
5/1/2012 SB OCT 2012 17 Put. @0.14
LC AUG 2012 104 Put. @0.675
LH AUG 2012 76 Put. @0.4
W JUL 2012 550 Put. @5.5

That is a nice safe set of options.

I see you aren't selling $500 options like Liberty Trading does. I don't either. Why are you selling where you are?

You picked the perfect day to sell that CL call. What is your secret?

Your wheat puts are a great trade.

I sold NG calls too. Jul 3.50. Feeling some heat, but today helped.

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Old May 22nd, 2012, 11:17 AM   #138 (permalink)
Trading for Fun
Huntsville AL/USA
 
Futures Experience: Intermediate
Platform: optionsXpress
Favorite Futures: Options on Futures
 
Posts: 54 since May 2012
Thanks: 80 given, 26 received


ron99 View Post
That is a nice safe set of options.

I see you aren't selling $500 options like Liberty Trading does. I don't either. Why are you selling where you are?

You picked the perfect day to sell that CL call. What is your secret?

Your wheat puts are a great trade.

I sold NG calls too. Jul 3.50. Feeling some heat, but today helped.

I shoot for a target ROI similar to yours. Sometimes I try to time a sell with a dip in a trading range.
I sold those wheat puts a little early when W was at 6.20. Wheat dropped down below 6.00 before this current run up.
My CL calls have done well. I got lucky on that last entry. I just had come CL 150's and CL170's expire.

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Old May 22nd, 2012, 11:45 AM   #139 (permalink)
Trading for Fun
Huntsville AL/USA
 
Futures Experience: Intermediate
Platform: optionsXpress
Favorite Futures: Options on Futures
 
Posts: 54 since May 2012
Thanks: 80 given, 26 received


alfredoe View Post
Could you share some of the options you sold, it may be important for us, new in this business.

Thanks,
Alfredo E

Ok, I shared some of my current positions that are doing well. Now I will share a couple of my big mistakes and lessons learned.

I sold NG 2.00 Puts in Feb when NG was around 3.00. I felt certain that NG would not drop down to 2.00.
2/27/2012 NG JUN 2012 2 Put. @0.019
2/24/2012 NG JUN 2012 2 Put. @0.015
Due to the mild winter and record production, NG steadily dropped through March and April, bottoming below 2.00 before the current recovery to 2.70. I bailed in late March.
3/29/2012 1:06:40 PM Order Filled You have bought 30 share(s) of NG JUN 2012 2 Put. @0.07
As you can see, I lost a lot $.
I went completely against the fundamentals. I also broke my own rules for exiting the trade because I was sure it was going to reverse. As you can see, it did reverse a couple of weeks after I bailed but I could not have afforded to risk it going ITM. An expensive lesson learned.

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Old May 22nd, 2012, 01:25 PM   #140 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,329 since Jul 2011
Thanks: 634 given, 3,909 received


Raven,
What rules do you use to exit losing positions?

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