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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,332 / 5,728
Last Reply:December 6th, 2016 (05:26 PM) Attachments:642

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Selling Options on Futures?

Old September 19th, 2013, 02:30 PM   #2101 (permalink)
Market Wizard
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Here's the most important news for CL.


Quoting 
Libya's crude oil production has recovered to nearly 40 percent
of its pre-war capacity with exports set to rise as major western
fields ramped up ouput after protesters agreed to reopen them.

Output has risen to 620,000 barrels per day (bpd), compared
with its pre-war capacity of 1.6 million bpd, two state National
Oil Corp officials said on Wednesday.


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Old September 19th, 2013, 02:37 PM   #2102 (permalink)
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turch View Post
Raven said he had 1 DTE, even worse!
By the way, thanks for starting this thread Ron, you are a champion!

It was still a couple of weeks to expiry when I got the notice. But still, I would have been fine without the added margin.

By the way, I sent an email to Robert Pandy. He responded and removed the 1.45 margin multiplier within 30 minutes.

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Old September 19th, 2013, 08:30 PM   #2103 (permalink)
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Raven View Post
It was still a couple of weeks to expiry when I got the notice. But still, I would have been fine without the added margin.

By the way, I sent an email to Robert Pandy. He responded and removed the 1.45 margin multiplier within 30 minutes.

If you don't mind, just briefly, what did you tell him?
Maybe I can do the same next time, instead of closing out positions.

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Old September 20th, 2013, 12:10 AM   #2104 (permalink)
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turch View Post
If you don't mind, just briefly, what did you tell him?
Maybe I can do the same next time, instead of closing out positions.

I admitted that I was a little too concentrated in CL but that most of them had expired. I also explained that I typically sold options far OTM and that my closest Call was still $20+ away from the price of CL.

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Old September 20th, 2013, 12:28 AM   #2105 (permalink)
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Raven View Post
I admitted that I was a little too concentrated in CL but that most of them had expired. I also explained that I typically sold options far OTM and that my closest Call was still $20+ away from the price of CL.

Do you recall the percentage of margin for CL relative to your account size? Was 25% of your account tied up in CL margin? 50%? 75%? It sounds like that might be part of the issue, although it probably is # of options sold, too. Maybe they take into account notional value of the options (which is ridiculous, but so is counting deep OTM options near expiration, and it sounds like they do that already).

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 21st, 2013, 01:23 PM   #2106 (permalink)
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kevinkdog View Post
Do you recall the percentage of margin for CL relative to your account size? Was 25% of your account tied up in CL margin? 50%? 75%? It sounds like that might be part of the issue, although it probably is # of options sold, too. Maybe they take into account notional value of the options (which is ridiculous, but so is counting deep OTM options near expiration, and it sounds like they do that already).

I had one place tell me that they compute what would happen to your account if futures moved 2 standard deviations the next day. I quit trading there.

That would be a 35 drop or 56 rise in CLX13.

I suspect that OX doesn't go quite that far.

My numbers were misleading. That drop or rise was for the next 365 days. If I change the days to 60 then it is 16 down and 19 up.

These numbers are available at OX on the Trade Calc, Probability Chart tab


Last edited by ron99; September 21st, 2013 at 01:36 PM. Reason: My mistake
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Old September 21st, 2013, 01:25 PM   #2107 (permalink)
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ron99 View Post
I had one place tell me that they compute what would happen to your account if futures moved 2 standard deviations the next day. I quit trading there.

That would be a 35 drop or 56 rise in CLX13.

I suspect that OX doesn't go quite that far.

2 standard devs in one day? That is what happens when you put statistics in front of all realism.

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 21st, 2013, 01:31 PM   #2108 (permalink)
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Good article (pdf) for beginners about futures and options vs ETFs and stocks by Carley Garner. It also explains trading CL futures and options.

http://www.decarleytrading.com/images/stories/Pitnews%20Crude%20Traders%20Options.pdf

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Old September 21st, 2013, 01:37 PM   #2109 (permalink)
Market Wizard
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ron99 View Post
I had one place tell me that they compute what would happen to your account if futures moved 2 standard deviations the next day. I quit trading there.

That would be a 35 drop or 56 rise in CLX13.

I suspect that OX doesn't go quite that far.

My numbers were misleading. That drop or rise was for the next 365 days. If I change the days to 60 then it is 16 down and 19 up. For 30 DTE it is 11 drop 13 rise.

These numbers are available at OX on the Trade Calc, Probability Chart tab.

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Old September 21st, 2013, 01:52 PM   #2110 (permalink)
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ron99 View Post
My numbers were misleading. That drop or rise was for the next 365 days. If I change the days to 60 then it is 16 down and 19 up. For 30 DTE it is 11 drop 13 rise.

These numbers are available at OX on the Trade Calc, Probability Chart tab.

That sounds more reasonable, I could see crude moving that much in extreme situations. Do you agree?

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