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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,515 / 5,734
Last Reply:6 Hours Ago (01:01 AM) Attachments:642

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Selling Options on Futures?

Old April 26th, 2013, 12:57 PM   #1441 (permalink)
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eudamonia View Post
@ron99

Are you thinking June calls or something like that? Looks like the ROI would start to be acceptable once margin drops on Wednesday.

I've been scaling out of my Nat Gas taking profits on this nice decline here. See if I can get filled at 0.001 on the rest.

I'm keeping some of my margin loose waiting for the ES to drop but so far it's just cruising

Yes CL calls. I have been putting them on the last few days.


Last edited by ron99; April 26th, 2013 at 03:19 PM. Reason: Fix my mistake.
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Old April 26th, 2013, 01:25 PM   #1442 (permalink)
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rosho01 View Post
Hi weekly options traders,

is it worth setting up a separate thread for weekly stock/index options as they are quite a different beast to FOPs and the strategies which most ppl are trading FOPs on here? ie high probability of vol spikes for one.

i will be keen to contribute, and have been demo trading them for few months using IB/OX. i wld set one up myself but wont be free to give full attention til a cpl of weeks time.

thks.

I'd say yes a separate thread would be good. Set it up and post a link to it here. Others then can add to it to get the discussion going.

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Old April 26th, 2013, 02:40 PM   #1443 (permalink)
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ES Options


opts,

Yes, for the most part, I am monitoring them.

I use TOS for execution and Sierra Chart for analysis. So, I already have my levels that I know where I want to sell. All I'm doing is waiting for an opp to present itself.

On 4/15, I was actually at a baseball game. I checked TOS on my phone and saw the day was selling off. I knew I wanted to start a position in 1465 puts at 2.00, so I placed my first order. Through the day, I kept checking...and towards the end of the day, there was another sell off. As part of my plan, I was already committed to selling more in the 3 area. I saw there was an offer out there for 3.30, so I tried to sell more at 3.20, but the market moved up a little and the offer went moved to 3.20...so, I moved my offer to 3.15 and was filled shortly after.

I was committed to add more in the 4 - 4.30 range as well, so I tried on 4/18, but the 1465s never traded that high, even with the move down, so no fill.

It's about finding the strike you want to sell and then waiting for the opportunity to present itself to sell it.

Calls are much more difficult...as we know, when price increases, even rapidly, volatility doesn't typically expand as much as it does when prices moves swiftly to the downside.

So, even though this week in ES was 45.50 points...that move off of 1530 to today hasn't increased the value of the call options at the level I want to sell really to the point where it makes sense to sell.

In calls, I've been kicking around the idea of taking in less premium for the same strike, while still scaling in...like yesterday for instance...after ES moved to the 88 area and backed off a little, I was expecting a retest of the HOD, so I was offering the 1615 WK1 calls for 1.20. It didn't get as high as I needed and they only went to 1.10 on the retest...so I was never filled. They are trading .35 x .50 right now. Frustrating, but nothing I can do...onto the next one.

What do you use for charts? Execution? Method of Analysis?

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Old April 26th, 2013, 03:03 PM   #1444 (permalink)
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a266199 View Post
opts,

I'm fairly new to posting on the board here.

I use volume profiling and auction market theory for my market analysis. As part of my analysis, I look at a long term chart that has daily bars that are set to 405 minutes per bar (RTH session minutes). From there, I look at days/areas that are "in balance" meaning they are in a range.

Conceptually, the market moves from balance to imbalance and back to balance...it does this on all fractals of time. On the larger timeframe, I am looking for these balance areas above and below where ES is currently trading and will determine what I think is support and resistance.

Also, I use R Project (R Studio) and a data set that has 322 weeks in it to run some stats. I look for most common weekly range, two week range, distribution of range extension past previous weeks highs/lows, etc...

I put this all together and get areas, or strikes where I think (and Ron as alluded to) the market is not likely to go in the period of time represented by the time left to expiration.

Once I have my areas outlined, it's time to wait for an opportunity. Those opportunities come when there is a big-ish move in the market and volatility increases. As the market moves and IV expands, further OTM option values expand with it...I want to get into deep OTM options as the IV's are increasing.

For example, on 4/15 as the market was going down, I scaled into 1465 puts. I sold my first bunch at 2.00 and then at the end of the day, I sold my second bunch for 3.15 giving me an average entry price of 2.57. My plan was to add another bunch if the value of the strike moved into the 4 - 4.30 range.

The stop on the position is always 2X the average entry price, giving this a 1:1 R/R.

Once I have my position, all I can do is sit back and wait...I'm either going to get stopped out or the contracts I sold will expire worthless.

It doesn't always work like this every week...in this environment, it's been hard. There have been some Friday's where I don't have anything expiring...but, this is the way I know how to do it and I can force a trade that doesn't fit. Hope this has been somewhat helpful.

Which contract were the 1465s?

And I am assuming your stop is 6.30 for the 3.15s?

How many DTE are you looking at?

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Old April 26th, 2013, 03:42 PM   #1445 (permalink)
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kevinkdog View Post
opts:



I'm getting a much higher margin requirement for these guys at OptionsXpress.

Sell -10 (EW1K31475P) 0.30 ($150.00)
Requirements

Total Cost ($150.00)
Initial Requirement $18,656.00
Maintenance Requirement $16,960.00
Total Requirements $18,656.00
Estimated Commission $20.05


Do you have offsetting long in there, or call options?

Interesting...

I thought it was because the market was not open yet but I just entered the same info into the Trade Calc and this is what I get:

Sell -10 (EW1K31475P) 0.30 ($150.00)
Requirements
Total Cost ($150.00)
Initial Requirement $4,664.00
Maintenance Requirement $4,240.00
Total Requirements $4,664.00
Estimated Commission $35.00

I am short some May ES 1290's also and crude calls right now.

Lower margin rate based on available cash? I have about 80% available cash right now. Not sure why the difference...

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Old April 26th, 2013, 03:47 PM   #1446 (permalink)
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opts,

I get what kevin posted.

Do you have the Include Existing Positions box checked? If so try it without it checked.

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Old April 26th, 2013, 03:49 PM   #1447 (permalink)
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opts View Post
Interesting...

I thought it was because the market was not open yet but I just entered the same info into the Trade Calc and this is what I get:

Sell -10 (EW1K31475P) 0.30 ($150.00)
Requirements
Total Cost ($150.00)
Initial Requirement $4,664.00
Maintenance Requirement $4,240.00
Total Requirements $4,664.00
Estimated Commission $35.00

I am short some May ES 1290's also and crude calls right now.

Lower margin rate based on available cash? I have about 80% available cash right now. Not sure why the difference...

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Old April 26th, 2013, 03:57 PM   #1448 (permalink)
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kevinkdog View Post
Do you have this box checked?

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This time, yes I did. Currently short 5 ES May 1290 puts but the sold calls on crude not showing here.

New numbers still lower from what you are getting....

Price

Cost
Sell -10 (EW1K31475P) 0.30 ($150.00)
Short -5 (ESK31290P) 0.45 ($112.50)
Requirements
Total Cost ($262.50)
Initial Requirement $7,058.44
Maintenance Requirement $6,432.90
Total Requirements $7,058.44
Estimated Commission $35.00


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Old April 26th, 2013, 03:58 PM   #1449 (permalink)
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Re NG

Quoting 
According to Bentek estimates, overall natural gas consumption in the United States decreased by 1.1 percent.

The residential/commercial sector consumed 1.9 percent more gas for the report period. Industrial consumption of natural gas also increased somewhat, up 0.6 percent for the report week. Natural gas consumption for power generation was down on average, falling by 6.1 percent. Most regions consumed less natural gas for electricity generation, with the exception of the Northeast and Southwest, which consumed slightly more.

Overall natural gas consumed in the electric power sector is down 23.3 percent relative to last year,
partly due to higher natural gas prices, and its relative price to coal which may influence electric power plant dispatch decisions.
http://www.cmegroup.com/education/market-commentary/energy/2013/04/pre-open-nat-...rgy+Market+Commentary%29
...
Baker Hughes: Weekly U.S. NG-Rig Count Falls by 13 to 366

I have no idea why NG surged the last 1/2 hour.

Now I know.

Quoting 
15:09 EDT - Natural gas ends the day lower, but the more noteworthy event was
the sudden end-of-day rally. May futures surged more than 7c per MMBtu during
the final half hour of trading, putting futures into positive territory on the
day. Traders attribute the rally to last-minute short covering ahead of the
expiration of the May contract, which finished out 1.5c lower at $4.152/MMBtu.



Last edited by ron99; April 26th, 2013 at 04:12 PM.
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Old April 26th, 2013, 04:03 PM   #1450 (permalink)
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opts View Post
This time, yes I did. Currently short 5 ES May 1290 puts but the sold calls on crude not showing here.

New numbers still lower from what you are getting....

Price

Cost
Sell -10 (EW1K31475P) 0.30 ($150.00)
Short -5 (ESK31290P) 0.45 ($112.50)
Requirements
Total Cost ($262.50)
Initial Requirement $7,058.44
Maintenance Requirement $6,432.90
Total Requirements $7,058.44
Estimated Commission $35.00



That's weird. Why would your margin requirements be less than mine, especially with those short 5 ESK31290P? You have more short exposure, so your margin requirement should be higher than mine.

Can you uncheck the box, rerun just the 10 Puts and post a screenshot?

Thanks

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