Selling Options on Futures? (Page 195) - Options on Futures | futures.io
futures.io futures trading
 

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures


Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,146 / 5,728
Last Reply:December 6th, 2016 (05:26 PM) Attachments:642

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • 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, and we will never resell your private information.

-- Big Mike
     

Reply
 642  
 
Thread Tools Search this Thread

Selling Options on Futures?

Old August 21st, 2013, 09:44 PM   #1941 (permalink)
Elite Member
London/UK
 
Futures Experience: Intermediate
Platform: IBs ladder / Market Delta charts
Broker/Data: IB / IQfeed
Favorite Futures: Bund
 
Posts: 438 since Sep 2012
Thanks: 260 given, 96 received


kevinkdog View Post
Great stuff, thanks for sharing! I'll have to follow this, should I trade ES puts in the future. I love that they have volume, which is why I may need them.

high volume, but what about the spread (bid/offer)?

the spreads in ES on IB are stupidly wide, why is liquidity so bad? lots are >200 size on bid/offer from the MMs - yet spread is 30% wide of price, why no volume/liquidity?

i was selling calls as soon as goldmans/jpm/TBTF analysts came out with their eoy projections (joke: i was short well before the goldman analyst report posted by ron). anyway, with a spread a $ wide in the (allegedly) most liquid equity market ever....why do i require a market move of 'move % x 1.3' for me to get out @ fair value? whats hte alternative - trade futures? well, i had v little view on direction.

the other issue with IB is that some of my orders do not show - i have adjusted lot size from 5 to 10 to 20........& they didnt show in the order book. but this issue seems to occur randomly - i cannot see a pattern for why it wld happen.

i am confused, what am i missing? anyone have similar issues?

happy trading.

Reply With Quote
     

Old August 21st, 2013, 10:00 PM   #1942 (permalink)
Elite Member
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,195 since Jul 2012
Thanks: 1,004 given, 3,969 received


rosho01 View Post
high volume, but what about the spread (bid/offer)?

the spreads in ES on IB are stupidly wide, why is liquidity so bad? lots are >200 size on bid/offer from the MMs - yet spread is 30% wide of price, why no volume/liquidity?

i was selling calls as soon as goldmans/jpm/TBTF analysts came out with their eoy projections (joke: i was short well before the goldman analyst report posted by ron). anyway, with a spread a $ wide in the (allegedly) most liquid equity market ever....why do i require a market move of 'move % x 1.3' for me to get out @ fair value? whats hte alternative - trade futures? well, i had v little view on direction.

the other issue with IB is that some of my orders do not show - i have adjusted lot size from 5 to 10 to 20........& they didnt show in the order book. but this issue seems to occur randomly - i cannot see a pattern for why it wld happen.

i am confused, what am i missing? anyone have similar issues?

happy trading.


I can't address your IB concerns, but quoted spread on IB should be the same as all other brokers. I would address order book issue with IB, too - maybe they are holding your orders for some reason.

Regarding wide spreads, I pay it no mind. Generally what I do is find a price I am willing to sell at (with an acceptable ROI), and then place a GTC order. If the order remains open past a day or 2, I check every few days to make sure I still want to be a seller at that price. I may get filled, I may not, but I know if I do get filled I'll get a good price. Right now, for example, I have 3 open orders that are a few days to a week old, and I am at the ask price. I'm just waiting for a buyer, and if none materializes, I'll just sell something else.


Deep out of money options will have larger spreads, and lower volume, because most people are trading close to at the money calls and puts.

Hopefully that explains some of your concern, or at least my take on the situation.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Reply With Quote
     
The following user says Thank You to kevinkdog for this post:
     

Old August 21st, 2013, 11:43 PM   #1943 (permalink)
Trading for Fun
Brisbane, Queensland, Australia
 
Futures Experience: Intermediate
Platform: OX, Z360, Excel
Broker/Data: DeCarley
Favorite Futures: Futures and Future Options
 
Posts: 121 since Aug 2013
Thanks: 75 given, 96 received

Seasonality


Is there an answer to charting seasonality other than those expensive charting applications?

Reply With Quote
     

Old August 21st, 2013, 11:59 PM   #1944 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 45,547 since Jun 2009
Thanks: 28,886 given, 80,159 received


BlueRoo View Post
Is there an answer to charting seasonality other than those expensive charting applications?

Do a search for seasonality, @Fat Tails has a nice thread on it.

Sent from my LG Optimus G Pro

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
     
The following 3 users say Thank You to Big Mike for this post:
     

Old August 22nd, 2013, 12:01 AM   #1945 (permalink)
Trading for Fun
Brisbane, Queensland, Australia
 
Futures Experience: Intermediate
Platform: OX, Z360, Excel
Broker/Data: DeCarley
Favorite Futures: Futures and Future Options
 
Posts: 121 since Aug 2013
Thanks: 75 given, 96 received

Diversity

Futures Edge on FIO

ron99 View Post
1) I generally look at the excess margin I had when I put on the position. If that is used up then it is time to move on. But I don't strictly adhere to that. I look at why the position has moved and use that to determine whether to stay or leave it. But it takes years and years of experience trading to get to that point. I have been trading 15 years.

2) For 2012 Short options - 746 trades of 5,034 contracts = 150k net profit. A lot less contracts than 2011 but more profit. 99.7% winners.

2013 will not be as good. Lost big money on $200 2 day GC crash.
So far 730 trades of 8,211 contracts = 159k net profit. 95.5% winners.

Average net profit
2012 $30/contract.
2013 $19/contract.

2013 Partial Details
KC 2,638 contracts 74k net profit 100% winners all rode to expiration.
CL 1,646 contracts 67k net profit
ES 1,071 contracts 28k net profit

GC 185 contracts 57k net loss


Appreciate your willingness to share your experience Ron. I trade CL as a monthly staple and want to look at diversification. I was interested to note KC (Red Wheat) is a major part of your current results. Is KC worth considering as a staple regular trade?

I also note that the group seems to sell DEEP OTM contracts. This is new to me. I learnt from someone who taught me to me much closer to the money. For CL my strangles are normally a spread of $25 to $30 between my short calls and puts. I would say the average profit on the trades I do is around $200 / contract but I rarely trade outside of the 30 DTE. I know it is a subjective comment/question. I generally aim for 3% return on capital per trade/month. This equates to 50% annual return on capital. Am I crazy doing it this way? Is there a better approach to have a return goal and trade allocation?

Reply With Quote
     

Old August 22nd, 2013, 08:42 AM   #1946 (permalink)
Elite Member
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,195 since Jul 2012
Thanks: 1,004 given, 3,969 received


BlueRoo View Post
Is there an answer to charting seasonality other than those expensive charting applications?

Moore Research (MRCI.com) is under $400 per year.

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

Old August 22nd, 2013, 09:11 AM   #1947 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
Posts: 233 since Aug 2012
Thanks: 29 given, 107 received


BlueRoo View Post
Is there an answer to charting seasonality other than those expensive charting applications?

Seasonal Charts

Reply With Quote
     

Old August 22nd, 2013, 09:23 AM   #1948 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
Posts: 233 since Aug 2012
Thanks: 29 given, 107 received


BlueRoo View Post
Appreciate your willingness to share your experience Ron. I trade CL as a monthly staple and want to look at diversification. I was interested to note KC (Red Wheat) is a major part of your current results. Is KC worth considering as a staple regular trade?

I also note that the group seems to sell DEEP OTM contracts. This is new to me. I learnt from someone who taught me to me much closer to the money. For CL my strangles are normally a spread of $25 to $30 between my short calls and puts. I would say the average profit on the trades I do is around $200 / contract but I rarely trade outside of the 30 DTE. I know it is a subjective comment/question. I generally aim for 3% return on capital per trade/month. This equates to 50% annual return on capital. Am I crazy doing it this way? Is there a better approach to have a return goal and trade allocation?


BlueRoo: everyone has their own technique and trading style. If something works for you, stick with it. My only concern with your strangles is the vicinity of your strangles to the underlying. If you are writing them at $30 between then your $15 away from the underlying, that's really close. However, your shorter holding time is a balancing factor which is good. Some recent posts here suggest that CL might be pulling back somewhat when Egypt settles down. For instance, say there is a peace agreement today, I'm thinking that CL could fall a good bit over a few days. Add that to a slower GDP here and there is your pullback.

Strangles are a very good strategy for CL right now because it has been bouncing around a few $ for a while. $15 away is too close for me to sell at any given time but recently this has been a safe range. I'd keep an eye on the fundamentals in relation to price for this marker more than anything right now.

This is my 2 cents..I'm pretty sure Ron can afford to throw in at least 3 or 4 cents here...

Reply With Quote
     

Old August 22nd, 2013, 10:05 AM   #1949 (permalink)
13options.com
Gilbert, AZ / USA
 
Futures Experience: Advanced
Platform: ThinkorSwim, OX
Broker/Data: ThinkorSwim
Favorite Futures: RUT
 
Posts: 10 since Mar 2010
Thanks: 4 given, 4 received

How have I missed this?

Man oh Man! this thread is fantastic - or possibly I am just the right trader, at the right time, with the right mindset for absorbing this stuff up like a sponge. I have very well defined strategies for trading options on the spx and rut, but am learning that options on futures is going to be a much more efficient use of margin. Looking into MRCI, and have an account now opened at OX. Learning the new platform makes me feel like a beginner all over again, but in tandem with how well I know the tos platform, I'm hoping it wont take too long to get up to speed. Incredible thanks to all the generosity shared here. GREAT stuff no doubt!!!

Kevin
(Any questions specifically related to my website, please send me a private message only.)
"Obstacles are those frightful things you see when you take your eyes off your goal." -- Henry Ford
Reply With Quote
     
The following user says Thank You to kevins for this post:
     

Old August 22nd, 2013, 11:47 AM   #1950 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,324 since Jul 2011
Thanks: 634 given, 3,905 received



rosho01 View Post
high volume, but what about the spread (bid/offer)?

the spreads in ES on IB are stupidly wide, why is liquidity so bad? lots are >200 size on bid/offer from the MMs - yet spread is 30% wide of price, why no volume/liquidity?

i was selling calls as soon as goldmans/jpm/TBTF analysts came out with their eoy projections (joke: i was short well before the goldman analyst report posted by ron). anyway, with a spread a $ wide in the (allegedly) most liquid equity market ever....why do i require a market move of 'move % x 1.3' for me to get out @ fair value? whats hte alternative - trade futures? well, i had v little view on direction.

the other issue with IB is that some of my orders do not show - i have adjusted lot size from 5 to 10 to 20........& they didnt show in the order book. but this issue seems to occur randomly - i cannot see a pattern for why it wld happen.

i am confused, what am i missing? anyone have similar issues?

happy trading.

Could the wide spreads be due to the time you are trading? Between 9am to 4pm EDT the spreads are very close. That would be 4pm to 11pm your time.

I'm looking at ES Oct 1400p bid is 2.00 offer is 2.10 at 10:45 EST. Most strikes there is a 0.10 spread.

Reply With Quote
     

Reply



futures.io > Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)
 

NinjaTrader 8: Features and Enhancements, Tips and Tricks

Dec 6
 

Al Brooks: Stop Losing when a Good Trade goes Bad, Correcting Mistakes

Elite only
 

Trading Technologies: Algo Design Lab hands-on

Dec 13
     

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 12:00 PM
Recommend futures, options Broker? sam1197 Brokers and Data Feeds 17 March 27th, 2013 01:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 05:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 01:40 PM
Zen-Fire Futures options tici88 Brokers and Data Feeds 1 July 30th, 2011 10:16 AM


All times are GMT -4. The time now is 05:52 AM.

Copyright © 2016 by 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 2016-12-08 in 0.20 seconds with 20 queries on phoenix via your IP 54.211.207.116