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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,146 / 5,728
Last Reply:December 6th, 2016 (05:26 PM) Attachments:642

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Selling Options on Futures?

Old April 26th, 2013, 04:17 PM   #1451 (permalink)
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opts View Post
Yes. But the weekly options are not available yet on the Droid Ap.

Here is the margin info to sell 10 for the May Week 1 1475 Put

No reason for the 1475 put...I just picked one for an example

Entered Trade


Price

Cost
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

Thanks Opts,

I just tried the May WK1 and am able to see different IM & MM amounts as expected. Previously, I was trying the Apr WK4 which expries today (04/26) on Tuesday (04/23). Maybe it was closed for trading but seems that is too soon.

The numbers I am getting for -- sell 10 for the May Week 1 1475 Put as of 1 minute ago,

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 $35.00

I have quite a few other positions open but NONE on ES. I have NOT checked the "Include existing position" box.


Last edited by Barrington; April 26th, 2013 at 04:18 PM. Reason: Add a statement
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Old April 26th, 2013, 04:37 PM   #1452 (permalink)
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Here is an example of how not to trade (I got lucky and made a profit anyway. But I broke all my rules).

On 1/15/13 I sold 20 Ck3 600p for 2.000. On 3/21 they were down to the bottom, 0.125. I should have traded out by at least then. But I kept them on because I figured the corn price was over 7.25 and I can make the last bit of premium by waiting.

Well the grain report came out, corn crashed, and the premium jumped to a peak of 3.625. Losing money then and huge margin increase.

I ignored my rules for getting out and kept them. Corn stayed above 6.28. The options just did expire OTM.

Lesson here is take the profit and don't try to squeeze the last penny out of the trade.

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Old April 26th, 2013, 04:49 PM   #1453 (permalink)
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Weekly Option management during flash crash


Hi,
I am also interested in selling weekly options but can not figure how to deal with flash crash type of events. Like in may 2010 for 200 plus points or one for 50 point in late dec 2012. Obviously to get any meaningful premium the strike would be within 100 points and then issue is how to manage the position so that it survives the flash crash.
During a flash crash (if market moves more than 100 points), the options that is sold at 0.50 point would be worth 20 plus points and margin requirement would go up by factor of 5 to 10 (including accounting for inflated premium). What would happen if broker liquidates it during the crash due to margin issues?
One approach would be to keep enough cash - like 10k for 1 option contract but then the return is very low...Selling deep OTM on monthly basis does not have this issue as then usually you are out 250-300 points from current price.
Looking for any thoughts here...
Thanks.

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Old April 26th, 2013, 04:57 PM   #1454 (permalink)
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ron99 View Post
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?

Hi Ron,

The 1465s were the April WK4 series. They will be off the books at the end of today. I sold them at 14:59 and 15:42 EST on 4/15.

I take the average entry price of my position and then double that. So if I enter at 2, 3, 4 the average entry would be 3.00 and the stop would be 6.00 on all contracts...meaning that if the value of the 1465 WK4 strike is at 6.00, I'll buy it back there. (I'm pretty sure you know what I meant, but for others who may not)

In DTE, I assume that is days to expire? I'm typically looking to enter with about 9 DTE...but if the opportunity presents itself on a Monday like it did on 4/15, or even further out, I will enter.

As an example, on 4/18, I was very close to initiating a new position in the EOM series as well. I was looking at 1425 - 1420's as possible strikes to enter...but I felt, at the time, that if 1530 broke, ES could see a move to the 1510 - 1508 area and that it was best not to push it. (I had other 1465s and actually 1615 calls on the books too.)

With this grind up in ES, the opportunities haven't been as abundant. I'd be interested in trading other markets, but as one adds another product, there is a lot of study that needs to take place to get a feel for how it behaves.

Thanks again for starting this thread and sharing, much appreciated.

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Old April 26th, 2013, 05:04 PM   #1455 (permalink)
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ron99 View Post
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?

Sorry Ron, I think the contract is EW4J3P1465

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Old April 26th, 2013, 05:10 PM   #1456 (permalink)
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Without and with box checked:


Same as previously posted. Not sure why my numbers are lower.

Attached Thumbnails
Selling Options on Futures?-.gif   Selling Options on Futures?-without.gif  
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Old April 26th, 2013, 05:10 PM   #1457 (permalink)
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Options


seemasp View Post
Hi,
I am also interested in selling weekly options but can not figure how to deal with flash crash type of events. Like in may 2010 for 200 plus points or one for 50 point in late dec 2012. Obviously to get any meaningful premium the strike would be within 100 points and then issue is how to manage the position so that it survives the flash crash.
During a flash crash (if market moves more than 100 points), the options that is sold at 0.50 point would be worth 20 plus points and margin requirement would go up by factor of 5 to 10 (including accounting for inflated premium). What would happen if broker liquidates it during the crash due to margin issues?
One approach would be to keep enough cash - like 10k for 1 option contract but then the return is very low...Selling deep OTM on monthly basis does not have this issue as then usually you are out 250-300 points from current price.
Looking for any thoughts here...
Thanks.

That's a good question...I think the only thing to do is what everyone else is doing...If you have an opportunity to cover at your stop price, you have to do it...if it goes past your stop...exit when/how you can.

Wait for some of the dust to settle and then re-initiate a new position much further OTM.

At least, that's my take.

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Old April 26th, 2013, 05:20 PM   #1458 (permalink)
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I do plan on selling on the ES with the 54 DTE per the 'video' but I still see more weakness in this market. I plan on watching the 54 DTE numbers and the 100 points away plus 12% from that which is now about the 1300 strike per the June contract.

Given my murky crystal ball indicator the 1300 should gain value per the weakness. Right now the BID is 1.00 = $50. I'll monitor things next week and if things continue to drop I'll either sell further out or stick with the 1300 for extra premium. I'd rather stay with the 1300 since that is the 'rule' more or less. Monday will be 54 DTE so we'll see...

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Old April 26th, 2013, 05:20 PM   #1459 (permalink)
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opts View Post
Without and with box checked:

Same as previously posted. Not sure why my numbers are lower.

That's weird.

I checked with SPAN and it says 18,722.00 IM

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Old April 26th, 2013, 05:24 PM   #1460 (permalink)
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ES Options



opts View Post
I do plan on selling on the ES with the 54 DTE per the 'video' but I still see more weakness in this market. I plan on watching the 54 DTE numbers and the 100 points away plus 12% from that which is now about the 1300 strike per the June contract.

Given my murky crystal ball indicator the 1300 should gain value per the weakness. Right now the BID is 1.00 = $50. I'll monitor things next week and if things continue to drop I'll either sell further out or stick with the 1300 for extra premium. I'd rather stay with the 1300 since that is the 'rule' more or less. Monday will be 54 DTE so we'll see...

54 days is a little far out for me...I like to sell shorter dated deep OTM options on larger than normal moves in ES...been working well so far and as Ron put it..."If it ain't broke, don't try to fix it..."

But it's important to find a style that fits your personality too...so, if more time on DTE is for you, that's great!

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