Selling Options on Futures? - Options on Futures | futures io social day trading
futures io futures trading


Selling Options on Futures?
Updated: Views / Replies:682,946 / 6,284
Created: by ron99 Attachments:732

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 732  
 
Thread Tools Search this Thread
 

Selling Options on Futures?

  #1481 (permalink)
Trading Apprentice
MA
 
Futures Experience: Intermediate
Platform: Velocity/Sierra Charts/TOS
Favorite Futures: ES
 
Posts: 23 since Mar 2011
Thanks: 1 given, 11 received

ES Options


ron99 View Post
a266199, how many trades in the 8 months? What percent winners?

Hi Ron,

38 trades. 76% winners...had a rough patch in late February (win % was 85%, took a string of losers). Expectancy was 6 ticks per contract and has dipped down to 4.5 ticks per contract...

I do struggle sometimes in being patient. I feel like there are different ways to skin this cat, but only know the way I have been doing it.

That is part of the reason I was so interested in this thread...reading through it to see if there is anything that jives with me and whether I can expand my horizons.

Reply With Quote
The following user says Thank You to a266199 for this post:
 
  #1482 (permalink)
Trading Apprentice
west palm beach + Florida
 
Futures Experience: Advanced
Platform: IB
Favorite Futures: ES
 
Posts: 31 since Mar 2013
Thanks: 10 given, 38 received


a266199 View Post
Hi Ron,

38 trades. 76% winners...had a rough patch in late February (win % was 85%, took a string of losers). Expectancy was 6 ticks per contract and has dipped down to 4.5 ticks per contract...

I do struggle sometimes in being patient. I feel like there are different ways to skin this cat, but only know the way I have been doing it.

That is part of the reason I was so interested in this thread...reading through it to see if there is anything that jives with me and whether I can expand my horizons.

When do you close the trade? At expiry of options or buy them back early at 20-25% of sold price? Also do you have more than 1 trade active at a time in same direction? Just trying to understand bit better here as the one example you gave was 10 days long trade....

Reply With Quote
 
  #1483 (permalink)
Trading Apprentice
MA
 
Futures Experience: Intermediate
Platform: Velocity/Sierra Charts/TOS
Favorite Futures: ES
 
Posts: 23 since Mar 2011
Thanks: 1 given, 11 received

ES Options



seemasp View Post
When do you close the trade? At expiry of options or buy them back early at 20-25% of sold price? Also do you have more than 1 trade active at a time in same direction? Just trying to understand bit better here as the one example you gave was 10 days long trade....

After I enter, the plan is to either let the contracts expire worthless or, if I take a loss, buy them back for 2X the average entry price.

When I first started, I had a rule that if I could realize 90% of the premium I sold on a monday/tuesday of the expiration week, I would close them. I have found that I have left money on the table doing that, so now, I just let them expire.

It really depends on what opportunities present themselves as to what I have on...right now, I'm flat.

On 4/17, I had 1465 puts and 1615 calls that I sold the week of 4/1 that were expiring on 4/19 and I also had 1465 puts that I sold on 4/15 that were expiring on 4/26. So, in that scenario, I had two positions in the same direction in two different expiration weeks.

The sell off on 4/15 didn't increase the premium received on the 1465s puts I sold the week of 4/1 (4/3 and 4/5 respectively) to the point to where I could add another bunch to that expiration week, so I initiated a new trade in the same strike for the following weeks' expiration.

Right now, stats show that there is a 75% probability that this weeks high in ES will be greater than the previous weeks high. If that does happen, the most common range extensions past the previous weeks high are 3 and 8 points respectively. The 70th percentile of range extension past the previous weeks high is 18 point.

So, if I'm going to think about selling calls, I am going to wait, at the very least, for this weeks high to break last weeks high by 3-8 points...and then I will start looking at WK2 call strikes.

On the put side, I like the 1440, 1465, 1475 strikes in general, but on this move up, they are obviously deflating...so, I'm not thinking about that right now. ES would have to start selling off for me to think about selling puts.

Not sure if that's more helpful or more confusing...sorry if it's more confusing.

Reply With Quote
The following 4 users say Thank You to a266199 for this post:
 
  #1484 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,679 since Jul 2011
Thanks: 777 given, 4,657 received
Forum Reputation: Legendary


a266199 View Post
Hi Ron,

38 trades. 76% winners...had a rough patch in late February (win % was 85%, took a string of losers). Expectancy was 6 ticks per contract and has dipped down to 4.5 ticks per contract...

I do struggle sometimes in being patient. I feel like there are different ways to skin this cat, but only know the way I have been doing it.

That is part of the reason I was so interested in this thread...reading through it to see if there is anything that jives with me and whether I can expand my horizons.

Hmmm that is more than I thought. 4-5 trades per month. So basically one every week? Or is it several for one contract and then maybe skip a contract of two?

Reply With Quote
 
  #1485 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,679 since Jul 2011
Thanks: 777 given, 4,657 received
Forum Reputation: Legendary


eudamonia View Post
My thoughts on Live Cattle:

1) Typically the seasonal turn is mid-May to mid-June.
2) Fundamentally demand spikes up during the 2nd quarter; however, prices are tempered due to heavy production
3) This year we have the smallest amount of production in 13 years.

August Live Cattle puts at 106 are 0.01 delta and are about 3% ROI. Thoughts?

My system say the delta is 0.0283.

2011 & 2010 had big drops in May. Maybe wait until late May to try and sell these.

The main problem will be finding buyers. It has only traded 7 times since 4/8.

Reply With Quote
The following user says Thank You to ron99 for this post:
 
  #1486 (permalink)
Trading Apprentice
MA
 
Futures Experience: Intermediate
Platform: Velocity/Sierra Charts/TOS
Favorite Futures: ES
 
Posts: 23 since Mar 2011
Thanks: 1 given, 11 received


ron99 View Post
Hmmm that is more than I thought. 4-5 trades per month. So basically one every week? Or is it several for one contract and then maybe skip a contract of two?

It's more the latter...there could be weeks where I have nothing expiring and weeks where I have multiple contracts expiring.

I'd like it to be contracts expiring every Friday, but that just hasn't played out.

I've thought about expanding to different products as well, but the learning curve is steep and just haven't started.

Starting from page one, I'm still on page 18 of this thread...haha...still need to read through all the pages first.

There is one piece that I have seen about how you calculate ROI. It may be redundant, but if possible...do you think you could use a real world example in ES in how you do it? If you would be willing, could you do it on the WK2 1620 calls? (from TOS = EW2K3C1620)

Any info is appreciated!

Reply With Quote
 
  #1487 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,679 since Jul 2011
Thanks: 777 given, 4,657 received
Forum Reputation: Legendary


a266199 View Post
It's more the latter...there could be weeks where I have nothing expiring and weeks where I have multiple contracts expiring.

I'd like it to be contracts expiring every Friday, but that just hasn't played out.

I've thought about expanding to different products as well, but the learning curve is steep and just haven't started.

Starting from page one, I'm still on page 18 of this thread...haha...still need to read through all the pages first.

There is one piece that I have seen about how you calculate ROI. It may be redundant, but if possible...do you think you could use a real world example in ES in how you do it? If you would be willing, could you do it on the WK2 1620 calls? (from TOS = EW2K3C1620)

Any info is appreciated!

IM @ OX $2,984.30. We use 2X for cash excess. Friday's settlement 0.95. 14 DTE for Friday. I'll use OX commissions and fees of 4.07.

((47.50-4.07) / (2984.30 x 3)) / 14 *30= 1.2% monthly ROI

Now I see it is bid at 1.90. If the margin does not go up by the same percentage as the premium today then ROI would be higher.

I haven't followed this enough to know how the margin would react today. Does the weekend time erosion make up for the increase in futures price today and margin doesn't increase? Or is it so close to ITM that the margin increases anyways?

Reply With Quote
 
  #1488 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,347 since Jul 2012
Thanks: 1,101 given, 4,259 received
Forum Reputation: Legendary


ron99 View Post
IM @ OX $2,984.30. We use 2X for cash excess. Friday's settlement 0.95. 14 DTE for Friday. I'll use OX commissions and fees of 4.07.

((47.50-4.07) / (2984.30 x 3)) / 14 *30= 1.2% monthly ROI

Now I see it is bid at 1.90. If the margin does not go up by the same percentage as the premium today then ROI would be higher.

I haven't followed this enough to know how the margin would react today. Does the weekend time erosion make up for the increase in futures price today and margin doesn't increase? Or is it so close to ITM that the margin increases anyways?

I'd wonder if 2X margin excess is too much for these short term options. Going with 1x would raise the ROI to 1.67%, although still relatively low.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Reply With Quote
 
  #1489 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,679 since Jul 2011
Thanks: 777 given, 4,657 received
Forum Reputation: Legendary


a266199 View Post
Starting from page one, I'm still on page 18 of this thread...haha...still need to read through all the pages first.

I never thought we would have this problem. That the thread would become so long that it is a daunting task to read it all.

Last week I reread the first 50 pages. Some good info at the beginning then there are pages where not many important nuggets are posted.

Reply With Quote
 
  #1490 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,679 since Jul 2011
Thanks: 777 given, 4,657 received
Forum Reputation: Legendary



kevinkdog View Post
I'd wonder if 2X margin excess is too much for these short term options. Going with 1x would raise the ROI to 1.67%, although still relatively low.

Yeah this trade is almost down to day trading, where you would carry less excess.

In most cases you aren't hanging on to the position so you wouldn't need a lot of excess. You are probably just trading out.

Reply With Quote

Reply



futures io > > > > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Battlestations: Show us your trading desks and win $750 in prizes

August
 

Ask Me Anything (AMA) w/Rod Casilli @ Collective2

Aug 23
 

Prototyping Python Strategies (part 3, Live Trading) w/Ran Aroussi [1PM ET]

Elite only
 

Develop Strategies and Perfect Execution w/Brannigan Barrett @ Axia Futures

Elite only

Introduction to Phillip Capital futures brokerage services

Aug TBD

How Monte Carlo Analysis Can Help Your Trading w/Kevin Davey

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Crude Oil (CL) futures inverse pairing options Big Mike Commodities Futures Trading 8 December 12th, 2013 11:00 AM
Recommend futures, options Broker? sam1197 Reviews of Brokers and Data Feeds 17 March 27th, 2013 12:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 04:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 12:40 PM
Zen-Fire Futures options tici88 Reviews of Brokers and Data Feeds 1 July 30th, 2011 09:16 AM


All times are GMT -4. The time now is 04:17 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-08-23 in 0.11 seconds with 20 queries on phoenix via your IP 23.20.103.97