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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,414 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

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Selling Options on Futures?

Old September 10th, 2012, 03:03 PM   #221 (permalink)
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Wow. I am gone for a week and there are several pages of more posts. Good to see.

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Old September 10th, 2012, 03:05 PM   #222 (permalink)
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Mobiius View Post
Another question I'd like to throw out there. When you have a short strangle do people find that the increase in one leg of the positions margin sometimes even's out with the decrease of the second leg's margin? I'm assuming the only thing that could increase both is heavy volatility in either direction.

Margin increases on the futures by the exchange will raise margins on both sides of strangles.

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Old September 10th, 2012, 03:12 PM   #223 (permalink)
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Mobiius View Post
Ron99 (or Brit)- You've mentioned you like to have a 100% stop. To clarify, does that mean if you sold a contract at $0.10 then you have a mental stop at @ $0.20?

Cheers.

With the very low premiums I don't use a mental stop like 100% because it is too easy to hit that stop. I just evaluate the fundamentals and the reason the trade is going against me and decide whether to hold or to dump.

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Old September 10th, 2012, 03:39 PM   #224 (permalink)
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Mobiius View Post
Hi Ron,

I managed to dig this out of this discussion in regards to the commissions at OX.
How do you go about working OX to recieve 2.99 / contract (or even close to it) when you do 4000 a year (not 1000+ a month)? Obviously you have superior 'past experience with other brokers' clout, but is there anything else?

I've got to try every angle I can. I may be spoiled because we only pay $2-$3 (with fees) even though we are minor players in the futures market. I just have a hard time swallowing $12.99 per contract (4-5 times our futures costs). Well... that and I'm scottish.

Even $5.99 would be better.

Cheers.

I traded at OX for 2 years before I asked about a lower rate. Because of my volume and track record of not getting margin calls at OX they were willing to give me the lower rate. You need to build up a history with them before you can expect a lower rate.

I did get that lower rate before Schwab bought them.

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Old September 10th, 2012, 03:43 PM   #225 (permalink)
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britkid99 View Post
Hi Ron,

Some time ago you were asking the above question about charts for options on futures.
Did you come to a satisfactory conclusion ie optionxpress etc?

I have attached a daily chart and Friday's Intraday chart of CL 80 put from Interactive Brokers. Is this what you were after?

Brit

I opened another account at another firm and they use the QST data program. It has charting on options.

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Old September 11th, 2012, 08:03 PM   #226 (permalink)
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Tradestation has pretty good options charting too just fyi. pretty similiar to IB's for the most part though. just my two cents.

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Old September 17th, 2012, 01:52 PM   #227 (permalink)
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My short Oct SB 16 puts expire today. I put them on 5/9/12 for 0.10. OX was charging $330 margin then. I put $660 more excess on for that trade. Futures were at 20.79.

On June 4th futures dropped to 19.29. The premium on that option moved up to 0.19. The OX margin on that day was $440.

The premium moving up caused a $100.80 loss in my account balance. The margin moved up $110. But the $660 excess I kept per contract when I put on the trade covered the $210 needed to keep the position on and kept me from getting a margin call and allowed me to ride out the market moving against me.

On Sep 6th futures were down to 18.87. But since the options was so close to expiring the premium did not go higher.

Today the options will expire at zero. That's a $112 profit, minus fees, per contract.

This is an example to show that even if you put on a position and the market moves somewhat against you, if you have enough excess you can ride out that movement and have a profitable trade. With the excess I had on I could have rode out an even larger move against me.

Of course if the market is moving against you because something fundamental changes, then bailing out on the position would be the smart thing to do. That is where experience comes in to know when to hold 'em and when to fold 'em. And even then you still will occasionally do the wrong thing. But the further out of the money your strikes are the safer your position.

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Old September 17th, 2012, 06:16 PM   #228 (permalink)
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ron99 View Post
Of course if the market is moving against you because something fundamental changes, then bailing out on the position would be the smart thing to do. That is where experience comes in to know when to hold 'em and when to fold 'em. And even then you still will occasionally do the wrong thing.

Hi ron, is there a danger that by the time you are aware of fundamental changes ie they get reported in the news sources you use, a bigger move may have occurred and you were unable to make the decision to bail?

I suppose what I am trying to ask is how many of your early exit decisions are made through pure intuition (gained from experience) and how many by dissemination of market information/news (also obviously gained through experience)?

Thanks.


Last edited by rosho01; September 17th, 2012 at 07:51 PM.
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Old September 17th, 2012, 07:26 PM   #229 (permalink)
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Limit Down in Soybeans

I sold Jan 13 2000 Soybean Calls on friday at 18 7/8 ($943.75) and today they closed at 10 ($500). 4% limit down move in futures and my premium nearly halved after 1 day.

Brit

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Old September 17th, 2012, 09:34 PM   #230 (permalink)
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nice work, what was your trade based on?


britkid99 View Post
I sold Jan 13 2000 Soybean Calls on friday at 18 7/8 ($943.75) and today they closed at 10 ($500). 4% limit down move in futures and my premium nearly halved after 1 day.

Brit


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