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


Selling Options on Futures?
Updated: Views / Replies:670,949 / 6,238
Created: by ron99 Attachments:729

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
 729  
 
Thread Tools Search this Thread
 

Selling Options on Futures?

  #1761 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
Posts: 234 since Aug 2012
Thanks: 29 given, 107 received

My 2 cents on crude oil:

The current situation in Egypt is a prime example as to why selling call options in crude oil can cause ulcers. Puts 'seem' to be much safer overall. If you're thinking about selling calls now with the logic that the unrest can't get much worse in that area...be careful. I'm thinking out loud here. Today turned a little more violent and crude was up about $2 per. The continued violence can increase prices further. Once calm takes over, if and when who knows, prices should level and fall back. But, this is where you still want to take caution with selling calls. There are more than likely a lot of Morsi supporters that can rise up and 'do something' to the Suez canal region, either threats or action that can spike prices again.

2 cents is all I got so now I'm broke...

Reply With Quote
 
  #1762 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,649 since Jul 2011
Thanks: 769 given, 4,575 received
Forum Reputation: Legendary

I threw caution to the wind and sold CL 130s & 140s. It may be summer insanity for me. I have plenty of cash excess right now.

Reply With Quote
 
  #1763 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
Posts: 234 since Aug 2012
Thanks: 29 given, 107 received



ron99 View Post
I threw caution to the wind and sold CL 130s & 140s. It may be summer insanity for me. I have plenty of cash excess right now.

Ron you're wild man like crazy, crazy in a groovy kind of way...just crazy man....


It's still raining!!!!

Reply With Quote
 
  #1764 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,649 since Jul 2011
Thanks: 769 given, 4,575 received
Forum Reputation: Legendary


opts View Post
Ron you're wild man like crazy, crazy in a groovy kind of way...just crazy man....


It's still raining!!!!

Quit sending your leftover rain up here!

Reply With Quote
 
  #1765 (permalink)
Trading Apprentice
Medellin
 
Futures Experience: Beginner
Platform: non
Favorite Futures: options in futures
 
Posts: 32 since Apr 2012
Thanks: 36 given, 12 received


opts View Post
My 2 cents on crude oil:

The current situation in Egypt is a prime example as to why selling call options in crude oil can cause ulcers.

I agree with you, that is why I am out of this market.

Reply With Quote
 
  #1766 (permalink)
Elite Member
Amsterdam
 
Futures Experience: None
Platform: J.A.R.V.I.S.
Favorite Futures: N/A
 
Cogito ergo sum's Avatar
 
Posts: 193 since Jul 2010
Thanks: 211 given, 157 received


alfredoe View Post
I agree with you, that is why I am out of this market.

Why not sell verticals instead? That is what I do as selling naked calls or puts is not for me. This way I limit my risk and am able to sleep at night. Essentially I see it as an hedge against a black swan event; an event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult to predict.

To collect enough premium the strikes are closer to the money but are still more then one std away. Hence they are generally still +EV trades. In addition, I like to sell on vol pops to collect a little more premium. In case of a trade going south I often roll the position before a max loss has been reached.

Reply With Quote
 
  #1767 (permalink)
10 out of 10
Sacramento, CA
 
Futures Experience: None
Platform: None
Broker/Data: OX and DeCarley
Favorite Futures: Futures options
 
eudamonia's Avatar
 
Posts: 310 since Jul 2010
Thanks: 299 given, 424 received


ron99 View Post
I threw caution to the wind and sold CL 130s & 140s. It may be summer insanity for me. I have plenty of cash excess right now.

I'm sitting on some 130 CL calls sold on July 2nd. Yep, not the best timing.

My thoughts on the technical situation:
  1. We had a clean break from a multi-month resistance zone at 100 (we've coiled the spring and could be in for a sustained break out)
  2. The current move has been spiking up aggressively in $2-3 increments (not likely to last since this is how sustained moves end not begin)
  3. The next substantial level of resistance is 110.
My thoughts on the news:
  1. The NFP news that things aren't as bad as we thought is unlikely to maintain any momentum in the markets. We are in the doldrums. Things aren't bad but we all know the only thing keeping the stock market up is printing $. The Fed has put themselves in a tough position with this one because the previous sentence starts as a fringe idea and then becomes what nearly everyone believes. Hence the fear of being weened off the free money.
  2. The situation in Egypt is less simple to gauge. This could either be a small incident that blows over in a few weeks or escalates the whole country - again.
My thoughts on the fundamentals:
  1. Haven't changed much in the last few weeks. I think that bears some reflecting. As Ron pointed out in an earlier post June supply tends to be a little tighter - however, that is a pretty temporary blip.
  2. Demand is still sluggish based on the woes of the world economy.

So the question is do I take a small loss now on my 130 calls or be prepared to ride it out to 110 or so? I have the buffer to ride it out to 110.

The comfortable thing to do is actually to take the loss. This frees up my mental capital to evaluate other trade ideas and frees me from the uncertainty of sitting in a position underwater. This also frees up my available margin to take more profitable trades that will have their margin requirements decay much faster.

The uncomfortable thing to do is usually the most prudent - which would be to hold the position to 110. This means that I am playing the statistically likely scenario (that this move goes nowhere) and in the long run likely results in higher profits. The challenge of course is that in the unlikely scenario of a fat tail I must punch out at a much larger loss and I must be ok with that. Failure to recognize the fat tail (and more importantly to act on it) is what ensures broken accounts.

Decisions, decisions.

Reply With Quote
The following user says Thank You to eudamonia for this post:
 
  #1768 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
Posts: 234 since Aug 2012
Thanks: 29 given, 107 received


Cogito ergo sum View Post
Why not sell verticals instead? That is what I do as selling naked calls or puts is not for me. This way I limit my risk and am able to sleep at night. Essentially I see it as an hedge against a black swan event; an event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult to predict.

To collect enough premium the strikes are closer to the money but are still more then one std away. Hence they are generally still +EV trades. In addition, I like to sell on vol pops to collect a little more premium. In case of a trade going south I often roll the position before a max loss has been reached.


How far apart you usually spread the options?

Reply With Quote
 
  #1769 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
Posts: 234 since Aug 2012
Thanks: 29 given, 107 received


eudamonia View Post
I'm sitting on some 130 CL calls sold on July 2nd. Yep, not the best timing.

My thoughts on the technical situation:
  1. We had a clean break from a multi-month resistance zone at 100 (we've coiled the spring and could be in for a sustained break out)
  2. The current move has been spiking up aggressively in $2-3 increments (not likely to last since this is how sustained moves end not begin)
  3. The next substantial level of resistance is 110.
My thoughts on the news:
  1. The NFP news that things aren't as bad as we thought is unlikely to maintain any momentum in the markets. We are in the doldrums. Things aren't bad but we all know the only thing keeping the stock market up is printing $. The Fed has put themselves in a tough position with this one because the previous sentence starts as a fringe idea and then becomes what nearly everyone believes. Hence the fear of being weened off the free money.
  2. The situation in Egypt is less simple to gauge. This could either be a small incident that blows over in a few weeks or escalates the whole country - again.
My thoughts on the fundamentals:
  1. Haven't changed much in the last few weeks. I think that bears some reflecting. As Ron pointed out in an earlier post June supply tends to be a little tighter - however, that is a pretty temporary blip.
  2. Demand is still sluggish based on the woes of the world economy.

So the question is do I take a small loss now on my 130 calls or be prepared to ride it out to 110 or so? I have the buffer to ride it out to 110.

The comfortable thing to do is actually to take the loss. This frees up my mental capital to evaluate other trade ideas and frees me from the uncertainty of sitting in a position underwater. This also frees up my available margin to take more profitable trades that will have their margin requirements decay much faster.

The uncomfortable thing to do is usually the most prudent - which would be to hold the position to 110. This means that I am playing the statistically likely scenario (that this move goes nowhere) and in the long run likely results in higher profits. The challenge of course is that in the unlikely scenario of a fat tail I must punch out at a much larger loss and I must be ok with that. Failure to recognize the fat tail (and more importantly to act on it) is what ensures broken accounts.

Decisions, decisions.

What month CL calls did you sell?

Reply With Quote
 
  #1770 (permalink)
10 out of 10
Sacramento, CA
 
Futures Experience: None
Platform: None
Broker/Data: OX and DeCarley
Favorite Futures: Futures options
 
eudamonia's Avatar
 
Posts: 310 since Jul 2010
Thanks: 299 given, 424 received


October Calls

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)

July Journal Challenge w/$1100 in prizes from TopstepTrader

July
 

An Afternoon with FIO member Softsoap

Elite only

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

August
 

Extended Ask Me Anything w/Brett Steenbarger

Elite only

Prototyping Python Strategies (part 3) w/Ran Aroussi

Elite only

Brannigan Barrett w/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 02:55 PM.

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 2017-07-23 in 0.21 seconds with 19 queries on phoenix via your IP 54.161.96.239