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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:570,062 / 5,734
Last Reply:Yesterday (01:01 AM) Attachments:642

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Selling Options on Futures?

Old December 9th, 2013, 10:28 PM   #2511 (permalink)
Market Wizard
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muffin58 View Post
Somebody may be looking for a job then.

If they put on 11,700 strangles then 1.7m loss is nothing to them. They will make out in the end.

Did you roll you're 5.50s into the 6.00 or are you just selling more?

Put on more. VG return for something that far OTM.

I'm looking forward to your webinar Thurs. Never been to one. Always find it interesting and educational on how others see and trade the markets. There use to be some very astute traders on the TFC forum. Very smart, and always willing to help. You remind me of those people. Hard to find that now without all the bickering on any of the commodity boards. Thanks

Thank you.

This webinar will be a primer. Very simple on what are options and the basics on how to sell them.

This is my first so we'll see how this goes.

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Old December 10th, 2013, 07:52 AM   #2512 (permalink)
Trading Apprentice
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datahogg View Post
Yes the IM was for 1 contract. I had only 5 total. Maybe IB uses REG - T margin instead of Span Margin for
options on futures?? At any rate, good luck.

Hey datahogg - Thanks for the information. I'm certainly going to investigate IB's conditions further. I recall recently reading that IB use SPAN for margin calculations but also have their own margin risk tool and apply which ever is the highest. This applies to Portfolio accounts of which I have one...Thanks again...

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Old December 10th, 2013, 09:06 AM   #2513 (permalink)
El "Infienno" existe
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njr1 View Post
Hi,

I have just joined this site and I found this thread which is exactly what I'm looking for. I have recently started getting into options and also read the James Cordier book which Ron99 mentioned and I found very interesting and I liked the non-nonsense approach to options. I have two questions which I hope people can provide some answers to given their experience of trading:

Question 1
I have already read the information on the first page of this thread which is very valuable but I wanted to ask what other 'fundamental advice' people would give to a beginner? Note: My plan is to sell naked PUTs/CALLs as well as short strangles and I will obviously let them expire and keep the premium as outlined in the James Cordier book. I am also going to start looking at the various commodity options as well and I'm keen to try trading some of the other index similar to 'Karen The Supertrader' as mentioned on the first page of this thread


Question 2
How do people identify options with a good margin to payout ratio? My current broker is Interactive Brokers and I have found that it is pretty difficult to find options with a decent profit to margin ratio. For example, my first naked on the ES is follows:

SOLD 5 PUTs ES FOP (EW) Jan 31'14 1600 PUT @ 4.0.

Premium: 1,000
Delta: -0.0568
Initial Margin: 23,247
Maintenance Margin: 18,599

I have a 250k account and such a high margin and relatively low profit will impact how many trades I can make per month. I know that the James Cordier recommends a ratio of 1:2 or 1:3 (profit:premium) but I can't find assets with these types of ratios.....

Any other tips, advice, etc, would be greatly appreciated.

Thanks,

njr1

Hi, i'm new at this thread and i was try options on futures & Index options 3 years ago.

If you have this margin account i would suggest try index options whith Portfolio margin at TOS. Only making iron condors you can make a very good ROI , PM requirements are very low. Try it at demo and you'll see.

Option on futures , try only the most liquid markets (Corn, Soybean, Coffee ,CL, NG) and far OTM round strikes, low deltas, only use 1/4 max. balance exposure.

Very good thread, i will read all posts this holidays.

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Old December 10th, 2013, 11:51 AM   #2514 (permalink)
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kaltrax View Post
Hi, i'm new at this thread and i was try options on futures & Index options 3 years ago.

If you have this margin account i would suggest try index options whith Portfolio margin at TOS. Only making iron condors you can make a very good ROI , PM requirements are very low. Try it at demo and you'll see.

Option on futures , try only the most liquid markets (Corn, Soybean, Coffee ,CL, NG) and far OTM round strikes, low deltas, only use 1/4 max. balance exposure.

Very good thread, i will read all posts this holidays.

Hi Kaltrax / Becky - Thanks for the information. I keep hearing good things about the TOS platform although I did come across one post where their margins are apparently not real time which have apparently caused some unexpected margin calls for some highly margined individuals. I was thinking about the nakeds and short strangle with very low probability of being ITM at expiry. However, the killer with this approach with IB is the margin requirements which is why I was wondering what other brokers seem to do. I'll certainly do some further investigations and see how the compare...Thanks....

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Old December 11th, 2013, 02:38 PM   #2515 (permalink)
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Futures Edge on FIO

Are you a NinjaTrader user?

 
It sure looks to me like manipulation is going on in NG futures now like it did in April 2013.

Last April the price shot skyward. Far too high. And then it dropped 30 cents in one day.

This morning at 8:15am ET NG was down .060. Then it jumped up 15 cents from there. This pattern of down overnight then rising late in the morning has been happening several times lately. Strange.

The long range US weather forecasts have normal to above normal temps for the majority of the country 8-14 days out. US oil production hit a new 25 year high last week. So wells aren't being hampered much by the cold weather.

But as the saying goes, "the market can be wrong longer than you can hang in there" certainly applies here.

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Old December 11th, 2013, 02:44 PM   #2516 (permalink)
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natural gas rise

Ron, I was also wondering what was driving today's sudden aggressive spike. Could it be that tomorrow's inventory withdraw report is already being priced in as larger than expected?

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Old December 11th, 2013, 02:59 PM   #2517 (permalink)
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christopher99 View Post
Ron, I was also wondering what was driving today's sudden aggressive spike. Could it be that tomorrow's inventory withdraw report is already being priced in as larger than expected?

Actually the prelim predictions for tomorrow are right near the 5 year average. 84 vs 76 5 yr ave. But who knows if that is correct. Next week's number on 12/19 will be far greater than average.

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Old December 11th, 2013, 03:05 PM   #2518 (permalink)
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Sold today couple of Mar 14 6 calls for 0.022. Looking forward to the next few days.

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Old December 11th, 2013, 03:08 PM   #2519 (permalink)
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ron99 View Post
It sure looks to me like manipulation is going on in NG futures now like it did in April 2013.

Last April the price shot skyward. Far too high. And then it dropped 30 cents in one day.

This morning at 8:15am ET NG was down .060. Then it jumped up 15 cents from there. This pattern of down overnight then rising late in the morning has been happening several times lately. Strange.

The long range US weather forecasts have normal to above normal temps for the majority of the country 8-14 days out. US oil production hit a new 25 year high last week. So wells aren't being hampered much by the cold weather.

But as the saying goes, "the market can be wrong longer than you can hang in there" certainly applies here.

Yeah this does feel a lot like April's manipulated move. Looking back over the last 20 years of MRCI data the most bullish move for this time of year (during a bull year which we currently aren't in) would be the volatility adjusted equivalent of a $1 move (which we'll see at the 4.4 level on the current NG contract). Technically, we have blown through several levels of resistance and are just under April's resistance level. We've had no significant pullbacks to talk of and this just feels like we're floating on air.

As you say - anything can happen. Personally, I've exhausted my 3X margin excess as of end of day today. I'm willing to hold this another 20cents. Contemplating whether it would be more capital efficient to ride it out or roll 'em up to 5.5s.

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Old December 11th, 2013, 04:07 PM   #2520 (permalink)
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Trying to sell NG calls has gone from" picking up nickels in front of a steamroller"

to "picking up dollars in front of Tony Stewart at Daytona"

NG is moving fast.

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