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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,106 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

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Selling Options on Futures?

Old September 16th, 2013, 10:06 PM   #2081 (permalink)
Trading for Fun
Huntsville AL/USA
 
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turch View Post
I don't mind sharing the email, I just don't know how to get it on this thread.
There are monkeys out there with computer skills better than mine.

Here it is. My margin did go up at the time but I just thought it was because CL spiked up. They also got my name completely wrong though it was for my IRA account.

Dear Mr. Randall,

Please be advised that your account XXXX-6219 has been flagged for review by our risk department as part of our concentration process. Your account is currently concentrated in a Crude Oil (NYMEX) position. In reviewing concentrations, futures and options on futures contracts are evaluated based on their trading volume, historic/implied volatility, and liquidity. We then stress test your portfolio and assess the impact of a price move on your account equity.

Being flagged for review implies having large positions that may currently represent significant losses to your account. It is important to remember that options are impacted by changes in both price and volatility and changes in volatility may be pronounced even when strike prices and expiration dates are still far out.

Due to your Concentration, your account, XXXX-6219, now has a Concentration Margin Call in the amount of $18,000 due Friday, 8/30/2013 by 11:00 am ET.

Going forward, should market conditions deteriorate or account equity erode, we may raise requirements on your positions, or may ask for additional funding. Please be mindful that, as stated in your margin agreement, we do reserve the right to take further action, including liquidation, should the level of exposure become a risk to OptionsXpress.

We are very happy to review these issues with you. Please feel free to contact us with any questions or concerns you may have by responding to this email or calling our trade desk at 888-280-6505.

Sincerely,

Robert Pandy
Risk Associate

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Old September 17th, 2013, 11:24 AM   #2082 (permalink)
Elite Member
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turch View Post
Give them a call,but make sure you speak to the guy that wrote the "Futures Concentration" email, Robert Pandy, (wrote mine). After telling him my account was up 300% for the year with no losing trades mostly in CL, he told me, "oh you trade CL a bit?I did not check". Basically in their (OX) system, if a red light goes off,there are no questions asked. Initially I spoke with the guys on the futures desk both giving a standard you need to close out some positions answer. No help at all.My existing CL 's were due to expire in 7 days, well OTM. I mean come on.They got $600 in commission out of me. Very frustrating. This happened last week, I'm still mad.
Anyway, hope this helps. Call them, to be sure.

300% for the year is pretty awesome. Is that just from selling options? If so, are you doing it differently than Ron's method?

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 17th, 2013, 11:48 AM   #2083 (permalink)
Market Wizard
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turch, this part of the letter is what concerns me.

Quoting 
changes in volatility may be pronounced even when strike prices and expiration dates are still far out.

You said they were only 7 DTE. They forgot to program the software to look at DTE.

Next time I suggest that everyone make sure they talk to Pandy. Because common sense would say that 7 DTE is not "expiration dates are still far out".

I sincerely hope OX does not go over the edge like they did at FC Stone. I had an account there that was only using 16% to cover margin. They told me it was too risky and I had to trade out of positions. As usual I was far OTM. I closed that account and all other accounts at FC Stone.

Raven, if you don't mind, can you tell us what positions and quantity of each that you had to trigger the concentration additional margin?

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Old September 17th, 2013, 12:27 PM   #2084 (permalink)
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ron99 View Post
I had one of those once after I had a margin call. But never without having a margin call first.

Surprised they do it on one account and not all of your accounts.

When they put that on my accounts they added more margin required for current positions.

I suspect this is a new procedure. I knew Schwab was going to ruin the good thing were had there.

I think they are well on the way to messing things up. When I tried to setup a corporate account with OX last month they messed me around for about 3 weeks before finally I spoke to several people who basically told me that you can't have a corporate account with OX for the purposes of investing. The guy told me, "if this was a landscape business then you could open it". Really .

Right now I've got the corporate account with DeCarley and the difference in customer service is night and day.

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Old September 17th, 2013, 12:46 PM   #2085 (permalink)
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eudamonia View Post
I think they are well on the way to messing things up. When I tried to setup a corporate account with OX last month they messed me around for about 3 weeks before finally I spoke to several people who basically told me that you can't have a corporate account with OX for the purposes of investing. The guy told me, "if this was a landscape business then you could open it". Really .

Right now I've got the corporate account with DeCarley and the difference in customer service is night and day.

I opened a corporate account at OX Jan 2011, before Schwab, and it was a pain then, but got it open. Took 2 weeks.

What are DeCarley's commission rates? What platform are you using to trade with there?

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Old September 17th, 2013, 02:25 PM   #2086 (permalink)
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Here are the settlement prices for ESv3 puts for 9/16 with 32 DTE.

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Based on how the curve starts to flatten out more at 0.35, I have decided that is where I will now exit them instead of riding them to expiration. Price erosion slows down at that point. Will be better ROI%.

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Old September 17th, 2013, 02:35 PM   #2087 (permalink)
Market Wizard
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FWIW
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The major drop in price and margin was far more due to ES futures rising than time erosion. 1566-1689 mid-June to mid-July.

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I don't know what I learned from this. Anybody see anything?

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Old September 17th, 2013, 02:45 PM   #2088 (permalink)
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ron99 View Post
I opened a corporate account at OX Jan 2011, before Schwab, and it was a pain then, but got it open. Took 2 weeks.

What are DeCarley's commission rates? What platform are you using to trade with there?

The rates are based on volume and are competitive but not the cheapest thing out there. However, I'm getting actual SPAN rates not 10-30% above SPAN. Most importantly they want my business and have a knowledgeable person on the other side of the phone/email. I'm not talking to monkey #5 who knows nothing about trading or what I do. Somehow that is priceless.

Zaner360 which is a very nice platform considering there is no additional monthly fee. I only wish they had a mobile version.

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Old September 17th, 2013, 02:48 PM   #2089 (permalink)
10 out of 10
Sacramento, CA
 
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ron99 View Post
FWIW
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


The major drop in price and margin was far more due to ES futures rising than time erosion. 1566-1689 mid-June to mid-July.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


I don't know what I learned from this. Anybody see anything?

We don't really know the CME SPAN rate formula; however, it likely involves some component of the volatility pricing model. The S&P 500 displays attributes of a volatility smile: meaning that as prices climb volatility shrinks. There is a high degree of inverse correlation between the VIX and the S&P 500.

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Old September 17th, 2013, 02:55 PM   #2090 (permalink)
Market Wizard
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eudamonia View Post
The rates are based on volume and are competitive but not the cheapest thing out there. However, I'm getting actual SPAN rates not 10-30% above SPAN. Most importantly they want my business and have a knowledgeable person on the other side of the phone/email. I'm not talking to monkey #5 who knows nothing about trading or what I do. Somehow that is priceless.

Zaner360 which is a very nice platform considering there is no additional monthly fee. I only wish they had a mobile version.

Yes SPAN margins are more important than commission fees when fees are close. An extra position is worth more than fee difference usually.

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