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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,059 / 5,728
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Selling Options on Futures?

Old May 7th, 2013, 01:13 AM   #1541 (permalink)
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Brit,

Can you give a link to the video you were talking about from Doc Severson ?

Thanks

V

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Old May 7th, 2013, 08:54 AM   #1542 (permalink)
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Brit,

Can you give a link to the video you were talking about from Doc Severson ?

Thanks

V

Unfortunately it looks like the download links have been pulled as it has now sold out.
I have a PDF document for it which I can send you if you PM me your email address.

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Old May 7th, 2013, 12:06 PM   #1543 (permalink)
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FWIW CL total option OI has been dropping.

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Old May 7th, 2013, 12:28 PM   #1544 (permalink)
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Here are other commodities option OI.

...2012.2013 (in millions)
ES 1.6 2.5
GC 1.3 1.6
C 1.6 1.6
S 0.9 0.7
W 0.3 0.4
LH 0.2 0.1
LC 0.3 0.2
CL 3.5 3.2
NG 215k 199k
RB 63k 50k
HO 97k 73k

ES and metals are up. The rest are down.

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Old May 7th, 2013, 12:29 PM   #1545 (permalink)
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Futures Edge on FIO

Are you a NinjaTrader user?

 
Now, that it seems the May drop is probably not going to materialize this year in ES, CL and the volatility in other commodities pretty low compared to historical numbers (there might be a coupel of exceptions which I have missed), what are people trading/watching?

I am looking at some CTN13 calls to sell.

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Old May 7th, 2013, 01:35 PM   #1546 (permalink)
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Right now I'm looking at June CL 130 calls and July Soybeans 1250/1240 puts (doing a vertical to get a decent ROI and offset the likely increased volatility).

I have a lot of softs on already Cotton, Sugar, Coffee so looking to diversify to some other markets.

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Old May 7th, 2013, 02:21 PM   #1547 (permalink)
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We aren't counting out the May drop just yet

We certainly respect the fact that seasonals don't happen as planned every year, but we also feel like over-extended bull markets are the best environments for such a pullback to happen. After all, in such a market buy stops have likely already been run, and sell stops are lining the downside. All it will take is a trigger to get the ball rolling.

With so many people expecting the May sell-off, it isn't surprising that we saw an early May rally (although I wasn't expecting it to be quite this swift). I guess what I'm saying is...perhaps this is the time to be nibbling on short calls in the CL and ES at distant strikes.

Many of our clients are holding short ES calls and short crude strangles, which are lopsided with a bearish bias. Unfortunately, we were caught up in the dramatic crude plunge/rally and our timing wasn't perfect on entering the short ES calls, but the beauty of option selling is that there is some room for error. I just hope we have enough

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Old May 7th, 2013, 02:22 PM   #1548 (permalink)
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Quoting 
Consider this encouraging research: The S&P 500 has been rallying for six months in a row, which has happened 48 times since 1950. Following these six-month winning streaks, stocks have historically continued rising. Sixty percent of the time, the S&P 500 climbed 0.79% over the next month; 84% of the time, stocks increased 3.50%, 7.77% and 11.77% the next three, six and 12 months following the streak, respectively.

Don't sell in May: Reasons to extend your stay

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Old May 7th, 2013, 02:26 PM   #1549 (permalink)
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decarleytrading View Post
We certainly respect the fact that seasonals don't happen as planned every year, but we also feel like over-extended bull markets are the best environments for such a pullback to happen. After all, in such a market buy stops have likely already been run, and sell stops are lining the downside. All it will take is a trigger to get the ball rolling.

With so many people expecting the May sell-off, it isn't surprising that we saw an early May rally (although I wasn't expecting it to be quite this swift). I guess what I'm saying is...perhaps this is the time to be nibbling on short calls in the CL and ES at distant strikes.

Many of our clients are holding short ES calls and short crude strangles, which are lopsided with a bearish bias. Unfortunately, we were caught up in the dramatic crude plunge/rally and our timing wasn't perfect on entering the short ES calls, but the beauty of option selling is that there is some room for error. I just hope we have enough

Can I ask what month/strikes they are holding?

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Old May 7th, 2013, 02:39 PM   #1550 (permalink)
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ron99 View Post
Can I ask what month/strikes they are holding?

In the ES, the June 1635 calls.

Crude is a little more complicated...we've re-strangled and rolled puts up at least once to catch up with volatility and deltas. But at the moment we are in a July 86/97 strangle. The call is uncomfortably close, we are typically at least $7 to $10 out of the money on each side, but this has been a wild move so we are willing to give it a little more time. The back up plan will likely be to either roll into an August strangle, or buy back the July 97 and sell another put and 2 calls higher up.

Accounting for all adjustments and locked in profits on puts, the approximate draw down per lot is roughly $1.50 ($1,500). It's been painful, but in light of the $12 drop and subsequent $11 rally it could have been much worse. Ironically, playing it safe (rolling puts into bullish strangles) when the market was trading in the high 80's was our downfall.

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