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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

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Selling Options on Futures?

Old September 10th, 2013, 10:18 AM   #2061 (permalink)
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Cleveland Ohio/United States
 
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ron99 View Post
OX increased the extra they charge for margin above SPAN on

CL from 20% to 30%
HO from 30% to 40%

They decreased GC from 10% to 0% (but ROI% is still <2.5).

Thanks! Do they tell you this via e-mail or some other method, or do you just use the SPAN program to compare required margins?

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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Old September 10th, 2013, 10:24 AM   #2062 (permalink)
Market Wizard
OH
 
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Iridium View Post
Hi all,
Finally finished to catch up with past posts. Many thanks especially to Ron but also to all the other great traders for such a great thread.
This is the only thread I follow and have to say that it's much better than almost any book you can find out there.
Currently I'm trading futures and some credit spreads on SPX or stocks, hope to put on my first option selling trade before end of the year.
I post a file in which I've collected bites and chuncks of what I've found relevant to me during the reading. Use it as you please, in my intention it should be a sort of reference manual or workbook for further study or thoughts about the subject.

I posted the link to your Word doc in the page one Quick Summary. If you update the doc the link in the Quick Summary will need to be updated.

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Old September 10th, 2013, 10:33 AM   #2063 (permalink)
Market Wizard
OH
 
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kevinkdog View Post
Thanks! Do they tell you this via e-mail or some other method, or do you just use the SPAN program to compare required margins?

I keep track of SPAN margins and OX margins on a spreadsheet. Daily I compare the two using a Watch List on OX, which has all of the front month contracts for each commodity, with my SPAN numbers. I use the email notices I get from CME and ICE to keep track of SPAN margin changes.

Unfortunately OX doesn't always keep the margin column on the Watch List and on the Quote Detail page up to date. It may be 1-2 days behind. So I may find out after the fact. The Trade Calc is always up to date.

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Old September 12th, 2013, 11:43 AM   #2064 (permalink)
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Option Calculator

Dear All,

Thanks for a great threat, I've been selling options for quite some time, but have really learnt a ton of new things here. thanks to all that have contributed.

A few months back I put together a super simple trade calculator based on some of the common rules of this threat plus a few of my own, I find I now use it to screen every trade I do. I'm amazes at how many trades I would have taken before that now show up as 'no goes' in the calc. I key the data in from OX trade calculator.

Basically key in the, contract, premium, initial margin, current date and expiry date, and it spits out DTE, rate of return till expiry ( I base that on 65% reserve cash, not 2/3 like some others), rate of return for 30 days. Above 2.5% shows green, below shows red.

I also key in the delta, above 0.05 shows red, below green, and it provides a risk return factor (RRF), which is basically the rate of return for 30 days / delta. What I'm looking for here is to get the best return at the lowest delta. I'm still tinkering with what determines an acceptable RRF, at the moment I've settled with above 1, seems to work good. The higher the figure the better.

Short DOTM CL puts in particular give great RRF's, and seem to be a staple sell for many here, with good reason. I used to sell a lot of currency options, but have avoided them recently as the risk return factor is actually generally very poor.

I'm looking for trades showing all greens. So far keeping me more on the straight and narrow.

Maybe some of you can find it useful or give you some ideas of your own for creating helpful little trading tools customized to the way you trade.

Attached Files
Register to download File Type: xlsx Option Calculator.xlsx (12.3 KB, 123 views)
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Old September 12th, 2013, 12:07 PM   #2065 (permalink)
Market Wizard
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Futures Edge on FIO
Harvard16, Excellent idea.

One thing to consider. The margin at OX may not equal the margin at where you are trading. Unless of course you are only trading at OX.

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Old September 12th, 2013, 10:38 PM   #2066 (permalink)
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Ron, thanks, as you'll know SPAN margin calc across a wide variety of contracts can be a bit of dark science.

I try and compare margin requirements by checking the difference in margin the next day on the statements against the initial OX calc, when putting on new positions, but of course I know that is not accurate as the other positions margins are also altering.

I do track my average margin efficiency , with OEC its 26.3% and with Crossland it's 23.5%, both quite close , in other words for every $1 premium collected I'm putting up about $4 in margin. I find that useful to quickly eyeball what size I'm looking to sell when excess margin becomes available.

I still maintain a small account with OX, unfortunately non- US traders don't get the better commission rates, so can't really compare margins better. But as a general guide for me it works fine.

One, interesting thing I've noted since selling further out than I used to the average margin efficiency has dropped about 2-3% on average.

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Old September 13th, 2013, 06:42 AM   #2067 (permalink)
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Harvard16 View Post
I still maintain a small account with OX, unfortunately non- US traders don't get the better commission rates, so can't really compare margins better.

It is possible for non-US traders to negotiate better comms with OX. I told them I wanted to move from IB because the margins are better at OX, but they would have to come closer to IB's $2.32. They put me on the standard US rate of 3.50 (+ fees).


Chris

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Old September 16th, 2013, 01:16 PM   #2068 (permalink)
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OX raising Margin by 45% on my IRA vs Reg

It appears that OX started requiring 45% more margin across the board on my IRA account vs my regular account. Is this just me or is anyone else seeing this?

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Old September 16th, 2013, 01:29 PM   #2069 (permalink)
Market Wizard
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Raven View Post
It appears that OX started requiring 45% more margin across the board on my IRA account vs my regular account. Is this just me or is anyone else seeing this?

Not in my accounts. Just checked now.

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Old September 16th, 2013, 01:31 PM   #2070 (permalink)
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ron99 View Post
Not in my accounts. Just checked now.

I didn't notice a change in my buying power. I noticed it when I was trying to place the exact same trade in both accounts.

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