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Selling Options on Futures?
Started: by ron99 Views / Replies:584,267 / 5,779
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Selling Options on Futures?

  #1641 (permalink)
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rosho01 View Post
ah cool, thks. bit of a stitch up for non US traders!

had you been trading high volume/for a while before asking for the reduction?

did you just ask customer service?

They quoted the 12.99 rate to me when I first asked about opening an account. I told them (by email) I was with IB where the comms are 2.32, but wanted to use OX because of the better margin, and could they put me on the 3.50 rate, please.

I'm on the 3.50 rate

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  #1642 (permalink)
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MGBRoadster View Post
They quoted the 12.99 rate to me when I first asked about opening an account. I told them (by email) I was with IB where the comms are 2.32, but wanted to use OX because of the better margin, and could they put me on the 3.50 rate, please.

I'm on the 3.50 rate

ah i sold myself short, i will try for it but they did say ask again in 3 months. thks for the info.

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  #1643 (permalink)
Market Wizard
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ron99 View Post
Also calculating ROI using today's premium but yesterday's margin will get you an incorrect ROI. If the premium is higher you can be assured that margin will be higher tomorrow.

It's best to use yesterday's settlement price for the option when calculating ROI and figure that margin and premium will move at about the same rates up or down.

I should say that if someone is bidding higher than fair value for the option, like KCU3 300C, then you can use that price.

Even if they settle the option higher than it should be because it is trading at the high level, like the 300c, the margin is still calculated based on the change in futures not the option settlement price (I believe, haven't checked lately).

Fair value=option settlement + (option delta * futures net change)

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  #1644 (permalink)
Market Wizard
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It just blows my mind when I see contracts that are far OTM trading on expiration day.

For example GCM3 1250P traded 2 hours ago. It is 130 OTM. I can't see any reason for someone to buy it today to put it on as a new position. Maybe I'm wrong about that.

So if they aren't buying to put it on as a new position then they are buying to trade out of a short position. But again that makes no sense. Why give up the $10 plus fees and commissions per contract? Do people not know how options expire? I bet there are some that don't.

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  #1645 (permalink)
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Futures Edge on FIO
Agreed, that some of the trades that occur on the other side of the market don't make a lot of sense.

In the next couple of weeks I have quite a few contracts that are expiring. Anyone see anything good that isn't in the softs or energies markets?

I'm looking at August Lean Hogs Calls due to seasonal tendencies and current fundamentals.


Last edited by eudamonia; May 28th, 2013 at 02:36 PM.
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  #1646 (permalink)
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Obviously we don't know what goes on in the minds of the traders, but keep in mind some trades may be executed as part of a spread or a more complex series of trades. One only sees one leg of the full transaction, which may not make sense.


ron99 View Post
It just blows my mind when I see contracts that are far OTM trading on expiration day.

For example GCM3 1250P traded 2 hours ago. It is 130 OTM. I can't see any reason for someone to buy it today to put it on as a new position. Maybe I'm wrong about that.

So if they aren't buying to put it on as a new position then they are buying to trade out of a short position. But again that makes no sense. Why give up the $10 plus fees and commissions per contract? Do people not know how options expire? I bet there are some that don't.


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  #1647 (permalink)
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ron99 View Post
It just blows my mind when I see contracts that are far OTM trading on expiration day.

For example GCM3 1250P traded 2 hours ago. It is 130 OTM. I can't see any reason for someone to buy it today to put it on as a new position. Maybe I'm wrong about that.

So if they aren't buying to put it on as a new position then they are buying to trade out of a short position. But again that makes no sense. Why give up the $10 plus fees and commissions per contract? Do people not know how options expire? I bet there are some that don't.

will some brokers require sizeable margin regardless the expiry being same day? if so perhaps they wanted/had to free up some margin?

free money for the seller.

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  #1648 (permalink)
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eudamonia View Post
Agreed, that some of the trades that occur on the other side of the market don't make a lot of sense.

In the next couple of weeks I have quite a few contracts that are expiring. Anyone see anything good that isn't in the softs or energies markets?

I'm looking at August Lean Hogs Calls due to seasonal tendencies and current fundamentals.


The only market that I have been liking is crude. I've got the Aug70 puts on and I'm watching Sept wheat. Been doing some credit spreads on the SPX and RUT and may open another account with TOS because of the lower index and stock option commission there.

Congrats on those coffee calls at 300 for those that took them

I don't get the gold trade either....

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  #1649 (permalink)
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What's up my fellow option sellers? Thanks Ron99 for alerting everyone to the coffee calls. I sold a bunch of those myself but my strikes were a bit closer to the money than KCU3 300C. Has coffee hit a bottom yet? I know the seasonal charts say the low usually occurs in mid June.

I noticed that the Trade and Profitability Calculator on OX is still not functioning correctly. It has been a while already. Anyone heard back from OX regarding this issue?

Hey opts, what wheat strikes are you looking at? What month? Puts? Calls? Strangle? Just curious.

CL appears to have been stuck in this $87-$95 range for a long time now too.

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  #1650 (permalink)
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MJ888 View Post
I noticed that the Trade and Profitability Calculator on OX is still not functioning correctly. It has been a while already. Anyone heard back from OX regarding this issue?

I just sent them an e-mail asking them to fix it. I think everyone needs to do that.

I am puzzled by this, since it has been a few weeks already, and usually they are very good on customer service issues.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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