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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:567,812 / 5,727
Last Reply:7 Hours Ago (12:40 PM) Attachments:642

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Selling Options on Futures?

Old August 15th, 2012, 03:12 PM   #171 (permalink)
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ron99 View Post
I made 15 trades for 128 contracts to put on future spreads. Lost 4k.
I made 62 trades for 386 contracts to buy or sell futures. Made 149k.
.

When you meant futures in those statements, did you mean options on futures? So for example,
62 trades for 386 sell or buy options contracts on futures?

Amazing results. Congrats. Looks like no need for daytrading here. Thanks for posting!

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Old August 15th, 2012, 03:41 PM   #172 (permalink)
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Cloudy View Post
When you meant futures in those statements, did you mean options on futures? So for example, 62 trades for 386 sell or buy options contracts on futures?

Amazing results. Congrats. Looks like no need for daytrading here. Thanks for posting!

Those were 386 futures contracts. And 128 future contracts done as spreads. The 410 were buying options on futures. The 1,621 were selling options on futures.

I do a mixture of types of trading. But my steady income is selling options on futures.

The futures trades were things that come up that I think will work based on fundamentals. Sometimes they work and sometimes they don't. Same for the futures spreads.

Last year I made 6 figures buying options on futures. This year it is a 60k loss.

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Old August 16th, 2012, 03:38 AM   #173 (permalink)
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ron99

britkid99
Hi Ron,

I am wondering if you have ever looked at selling ITM strangles.

What i am thinking of is say CL, selling $5 ITM Put and $5 ITM Call

This would give a $10 band for the price during which time gains on one side would largely be offset by loss in the other side as both legs are ITM. Although deltas would be high so a quick surge in price would be harmful.

Trade management would be to close out positions if price hits either strike and re-enter new trade.

The attraction is obviously the higher value premiums available.
The return on margin is vastly increased over selling OTM

What do you think? Am I missing something obvious?
I would really appreciate your comments on this idea as I may be overlooking something that renders it impractical.

Best regards
Brit

Hi,
I have done strangles. Yes the ROI is very good when they work. But the chances of it not working are higher.

The main thing to look for is a flat futures market. I have never done strangles in CL because it is rarely flat.

Right now a have a Dec GC 1650 strangle. Sold it at $127 for both combined. GC has been fairly flat since mid Mar. I picked a strike above the current futures because GC usually goes up in the fall.

I usually get out of the strangle 30 days before expiration because the last 30 days are the most volatile. You have collected most of the time premium by then.

Is there a reason you PMed this to me instead of posting it in the thread?

Ron

The thread seemed to have died out but I see a recent flurry of activity which is nice.

Another thought I had on the management side would be to scale in with futures contract(s) when one strike is being approached. I know many say this is risky as the market could reverse the moment after you enter (that's trading) but if you have sold multiple options and one leg is coming under pressure then this could be an alternative which could keep the trade open till expiry rather than closing out in a panic and taking a definate loss.

Brit

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Old August 17th, 2012, 05:52 PM   #174 (permalink)
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Selling Dec Corn Calls

I recently received the latest email from Mr Cordier with regard to selling Dec Corn Calls.
He is suggesting corn is at or near its peak and to sell calls above 960 (20% OTM) whilst the options are hot from recent volatility.

I have enclosed a chart of December Corn ZW showing the latest delta volume picture.
You can see the sellers from the highs at 848 have have now covered their shorts along with a little fresh buying from the 785 level.

To me this says there are no more sellers left to cover and push prices higher. It will take fresh new buyers to come in to the market to do that. This tends to support what Mr Cordier says at least for the moment.

Regards
Brit

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Selling Options on Futures?-corn-17-8-12.jpg  
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Old August 17th, 2012, 06:12 PM   #175 (permalink)
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Futures Edge on FIO
I'll stay away from all grains the rest of this year. Too volatile.

Did Cordier say anything about PFG?

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Old August 17th, 2012, 07:26 PM   #176 (permalink)
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ron99 View Post
I'll stay away from all grains the rest of this year. Too volatile.

Did Cordier say anything about PFG?

No, only this....

SPECIAL ANNOUNCEMENT To all Option Seller Newsletter Readers: In honor of our new clearing agreement with FC Stone in Chicago, Liberty Trading Group will be offering a $100,000 "starter" account to new investors for a limited time. If you have ever wanted to work with the authors of The Complete Guide to Option Selling but did not want to commit the $250,000, this is your opportunity to get started selling options with the pros. The starter account will only be available for a limited time. If you are interested in taking advantage of this offer, feel free to contact our offices next week for account forms. Free consultations will be available on a limited basis if you have questions regarding an account.

I note I seem to have dropped off their monthly prospective customer list, which is a shame as it at least gave some ideas as to where to look and when.

Brit

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Old August 17th, 2012, 10:02 PM   #177 (permalink)
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They must have lost a bunch of money and customers if they are lowering their minimum.

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Old August 18th, 2012, 06:06 AM   #178 (permalink)
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They must have lost a bunch of money and customers if they are lowering their minimum.

That was my thought too.

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Old August 21st, 2012, 02:40 PM   #179 (permalink)
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Here's a link to Cordier's corn article. Dec Corn futures prices are up 45 cents since he wrote the article.
Link

The delta on the Dec 960 calls is up to .2465. No way I touch that with a 10 foot pole. Far too risky. The price of that option has gone UP 50% since he wrote the article.

He says the grain yields are already built in. I disagree because with a drought the yields vary so much by area that it makes it very hard to accurately predict total yields in the US. The crop tours are getting lower numbers than expected. Now we also have drought reducing yields of grains in Russia.

Grains this year are just too volatile. Some times you just need to totally avoid some commodities until they calm down.

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Old August 21st, 2012, 07:10 PM   #180 (permalink)
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ron99 View Post

The delta on the Dec 960 calls is up to .2465. No way I touch that with a 10 foot pole. Far too risky. The price of that option has gone UP 50% since he wrote the article.

What did you use to calculate delta ? ( I am just wondering )

Math. A gateway drug to reality.
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