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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,171 / 5,728
Last Reply:December 6th, 2016 (05:26 PM) Attachments:642

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Selling Options on Futures?

Old July 17th, 2013, 07:41 PM   #1821 (permalink)
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ron99 View Post
Oh yeah if bid/ask is spread apart I usually try to work inbetween.

But like today on the KCU3 200C I just hit the bid for my full quantity because the price was fair and I wanted them before someone else got them. With that short DTE there aren't always a lot of bids. I suspect it was someone wanting out of shorts.

Now something further out in time you can play a little more with asks higher than the bids because those are probably somebody wanting to put on new positions. Like when we put on the KC 300 calls at 90+ DTE.

But using your example, if you put a full size order at 9, someone could sense you might come lower, because of your larger size order, and be ahead of you by bidding at 7 or 6. So in this example I would use the lower size at 9 and increase it when going to 8, 7, 6.

I suspected that showing my full size size might tip my hand and have other traders jump in front - glad to see you thought the same. It's one of the reasons why I asked the question in the first place. Appreciate you sharing your experience with us!

Sometimes on strikes that are just slightly closer to the money you see (market makers/bots/algos???) camped on a strike with large size. That made me think if I showed large size other traders might think I was a MM/bot/algo so I might be able to get away with showing full size.

Will experiment around to find what is most suitable for my style of trading.

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Old July 17th, 2013, 08:57 PM   #1822 (permalink)
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Trade Alert!

There are bids in Sep coffee calls which are only 23 DTE. For example 200s are bid 0.05.

Asleep at the wheel here...Insert pirate sound here -> Arrrrrrrrrrrrrrrrr!!!!!

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Old July 18th, 2013, 10:47 AM   #1823 (permalink)
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Asleep at the wheel here...Insert pirate sound here -> Arrrrrrrrrrrrrrrrr!!!!!

Actually prices are better today for selling, so this time good thing you missed it.

Coffee is up on short covering. Total futures OI has barely moved. So shorts getting out and new shorts selling at these inflated numbers. That is why I'm not worried about it getting too high.

Last DCOT futures only report had specs net short 27k.

Futures are up because a cold front is moving through the coffee region in Brazil on Monday. Tuesday AM is predicted to get down to 34 degrees. Then warmer temps will follow.
10 Day Weather Forecast for Pocos de Caldas - weather.com


Quoting 
Temperatures average near to above normal Sunday but it should turn cooler or colder Monday and
Tuesday. Low temperatures may fall into the upper 30s F (3-4C) in the southern areas either Tuesday or Wednesday mornings. This means a slight chance for some patchy frost. Colder temperatures, lows 34-37F (1-3C) are expected in minor growing areas of northern Parana during this period. There is a higher risk of
frost in this area and a slight risk of a light freeze.

A turn to much cooler to colder weather is expected through coffee growing areas early next week. It appear likely that at least some frost may occur in minor growing areas of northern Parana with an outside risk of light freezing conditions. Major growing areas of Sao Paulo and Minas Gerais will also turn much cooler. The early call suggests lows may drip to near 3 C (37 F) in some southern areas. This would imply a chance for patchy frost.

The hard part is knowing if today is the high or will Friday have more short covering. I'm guessing it will. I should have figured that out before my trade alert yesterday.

But the weather forecast could change today or tomorrow and not show as cold temps. Who knows.

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Old July 18th, 2013, 11:20 AM   #1824 (permalink)
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The hard part is knowing if today is the high or will Friday have more short covering. I'm guessing it will. I should have figured that out before my trade alert yesterday.

But the weather forecast could change today or tomorrow and not show as cold temps. Who knows.

The good thing with selling OTM options is you don't have to be perfect on your market timing. Even the .05's from yesterday are a whopping good deal.

From a technical standpoint we are working back into a major resistance level at around the 137-140 area. I expect us to find resistance in that zone.

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Old July 18th, 2013, 02:06 PM   #1825 (permalink)
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Well that didn't last long. KC is now 7.00 below the high of today.

Some of the calls are now way over bid.

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Old July 18th, 2013, 05:39 PM   #1826 (permalink)
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Wow! What a crazy move in coffee today. September hit a high of 134.00 only to retreat and give it ALL back to close a touch lower. NUTS!

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Old July 19th, 2013, 04:32 AM   #1827 (permalink)
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Yes i woke up to a nasty little surprise with my Sept and Oct coffee calls. Bugger i only sold the Oct calls early in the week too. I am thinking about adding to my Oct calls further out of the money than i was able to do earlier in the week.

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Old July 19th, 2013, 04:38 AM   #1828 (permalink)
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Wow! What a crazy move in coffee today.

NUTS!

I think you meant BEANS!

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Old July 19th, 2013, 12:16 PM   #1829 (permalink)
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The last 5 years in a row, CL inventories, after being down the prior 3-4 weeks, are up for the 3rd week of July.

So if you are wanting to sell CL calls I would do it before Tuesday PM's API inventory report.

Of course, past performance may not be indicative of future results.

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Old July 19th, 2013, 12:30 PM   #1830 (permalink)
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ron99 View Post
Actually prices are better today for selling, so this time good thing you missed it.

Coffee is up on short covering. Total futures OI has barely moved. So shorts getting out and new shorts selling at these inflated numbers. That is why I'm not worried about it getting too high.

Last DCOT futures only report had specs net short 27k.

Futures are up because a cold front is moving through the coffee region in Brazil on Monday. Tuesday AM is predicted to get down to 34 degrees. Then warmer temps will follow.
10 Day Weather Forecast for Pocos de Caldas - weather.com



The hard part is knowing if today is the high or will Friday have more short covering. I'm guessing it will. I should have figured that out before my trade alert yesterday.

But the weather forecast could change today or tomorrow and not show as cold temps. Who knows.

Weather.com has raised the low temp forecast for Tuesday for Brazil from 34 to 36.

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