Selling Options on Futures? (Page 26) - Options on Futures | futures.io
futures.io futures trading
 

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures


Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,446 / 5,734
Last Reply:2 Hours Ago (01:01 AM) Attachments:642

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.


You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike
     

Reply
 642  
 
Thread Tools Search this Thread

Selling Options on Futures?

Old September 24th, 2012, 07:21 PM   #251 (permalink)
Elite Member
London/UK
 
Futures Experience: Intermediate
Platform: IBs ladder / Market Delta charts
Broker/Data: IB / IQfeed
Favorite Futures: Bund
 
Posts: 438 since Sep 2012
Thanks: 260 given, 96 received


ron99 View Post
The SPAN minimum margin for being short a Dec CL 70 put is $436 (Sep 24th). Premium is $150. With double excess your possible ROI is 11.3%.

That's some pretty decent returns.

Shame, with OX I can only get double excess on stocks. I assume you get it on commodity futures due to volume traded/time you've been using them?

Reply With Quote
     

Old September 24th, 2012, 08:12 PM   #252 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,327 since Jul 2011
Thanks: 634 given, 3,905 received


rosho01 View Post
That's some pretty decent returns.

Shame, with OX I can only get double excess on stocks. I assume you get it on commodity futures due to volume traded/time you've been using them?

Double excess means that I keep double the margin as excess to cover any movements of the option against me.

For example, if the margin is $436, I then keep $872 (436 X 2) extra per contract. Double excess. That's a total of $1208 per contract in my account for each option.

If you don't keep enough excess you will either be getting margin calls or you will be having to trade out of positions when the market makes an unexpected move. With plenty of excess and positions far enough OTM you will rarely have to trade out of positions at a loss.

For this year I have made a profit on 96% of the short options I put on. Having a higher percentage of winners is more important than trying to make more profit per trade. Because if you do riskier trades to make a larger profit per trade there will be a time when you suffer a big loss and that will take away a lot of the profit you worked so hard to make.

Reply With Quote
     
The following 5 users say Thank You to ron99 for this post:
     

Old September 24th, 2012, 08:25 PM   #253 (permalink)
Elite Member
London/UK
 
Futures Experience: Intermediate
Platform: IBs ladder / Market Delta charts
Broker/Data: IB / IQfeed
Favorite Futures: Bund
 
Posts: 438 since Sep 2012
Thanks: 260 given, 96 received



ron99 View Post
Double excess means that I keep double the margin as excess to cover any movements of the option against me.

For example, if the margin is $436, I then keep $872 (436 X 2) extra per contract. Double excess. That's a total of $1208 per contract in my account for each option.

If you don't keep enough excess you will either be getting margin calls or you will be having to trade out of positions when the market makes an unexpected move. With plenty of excess and positions far enough OTM you will rarely have to trade out of positions at a loss.

For this year I have made a profit on 96% of the short options I put on. Having a higher percentage of winners is more important than trying to make more profit per trade. Because if you do riskier trades to make a larger profit per trade there will be a time when you suffer a big loss and that will take away a lot of the profit you worked so hard to make.

Ah sorry, not heard the term double excess before (did search this thread)......but OX customer service had (in different context).

I like the credit spread type of trade, good for the beginner (me) to try with small account. Have you ever tried to trade butterfly's / condors et al in commodity futures? Or is the greater volatility just not worth it? I have seen a few videos showing the management of trading fly's in volatile markets, but only with equity/eq index/eq etfs, and it seems quite challenging but manageable. The target returns in one month (trading 1mth to expiry) were 15% of margin. I suppose it suits the more liquid instruments better, so no point doing for commod futs.

Thanks for you guys answering questions, I have bought and read 3/4 of the cordier book, and am working my way through a ton of cboe option webinars to get up to speed. Hopefully my questions will become a little more challenging as time goes on.

Reply With Quote
     

Old September 25th, 2012, 12:39 PM   #254 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,327 since Jul 2011
Thanks: 634 given, 3,905 received

I have done condors. But I don't do any adjusting of positions to make them delta neutral.

You are correct that you don't want to do them in volatile markets.

Reply With Quote
     
The following user says Thank You to ron99 for this post:
     

Old September 27th, 2012, 11:19 AM   #255 (permalink)
Elite Member
London/UK
 
Futures Experience: Intermediate
Platform: IBs ladder / Market Delta charts
Broker/Data: IB / IQfeed
Favorite Futures: Bund
 
Posts: 438 since Sep 2012
Thanks: 260 given, 96 received

Futures Edge on FIO

Are you a NinjaTrader user?

 
hi Ron

Where are you getting your delta data for coffee (KC), I cannot find anything in OX? I cannot find it in IB either. Specifically I am looking at the KCZ22200C option delta. I would like access to the other greeks also, and previous days data is fine.

You mentioned that you are not interested in Volatility data (vega), but is it not possible you will have to bail out of a position due to price moving against you (closer to strike / increasing the delta) and also due to the price increasing because of increased volatility? So you are obviously trading theta but also short volatility?

Happy trading.


Last edited by rosho01; September 27th, 2012 at 11:38 AM.
Reply With Quote
     

Old September 27th, 2012, 04:08 PM   #256 (permalink)
Elite Member
Milton Keynes UK
 
Futures Experience: Intermediate
Platform: Investor/RT, Sierra Chart
Favorite Futures: Futures Options, CL
 
Posts: 156 since Jun 2009
Thanks: 74 given, 115 received


rosho01 View Post
hi Ron

Where are you getting your delta data for coffee (KC), I cannot find anything in OX? I cannot find it in IB either. Specifically I am looking at the KCZ22200C option delta. I would like access to the other greeks also, and previous days data is fine.

You mentioned that you are not interested in Volatility data (vega), but is it not possible you will have to bail out of a position due to price moving against you (closer to strike / increasing the delta) and also due to the price increasing because of increased volatility? So you are obviously trading theta but also short volatility?

Happy trading.

Like this you mean

Attached Thumbnails
Selling Options on Futures?-coffee.jpg  
Reply With Quote
     
The following user says Thank You to britkid99 for this post:
     

Old September 27th, 2012, 04:44 PM   #257 (permalink)
Elite Member
London/UK
 
Futures Experience: Intermediate
Platform: IBs ladder / Market Delta charts
Broker/Data: IB / IQfeed
Favorite Futures: Bund
 
Posts: 438 since Sep 2012
Thanks: 260 given, 96 received


britkid99 View Post
Like this you mean

great, thanks

Reply With Quote
     

Old September 27th, 2012, 06:38 PM   #258 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,327 since Jul 2011
Thanks: 634 given, 3,905 received

Technicals for options on OX are on the Futures Options Quote Detail page and also on the Option Chain page.

They also are available on the CME daily bulletins.
Daily Bulletin | Build a Report

Reply With Quote
     
The following 4 users say Thank You to ron99 for this post:
     

Old September 27th, 2012, 06:41 PM   #259 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,327 since Jul 2011
Thanks: 634 given, 3,905 received


rosho01 View Post
You mentioned that you are not interested in Volatility data (vega), but is it not possible you will have to bail out of a position due to price moving against you (closer to strike / increasing the delta) and also due to the price increasing because of increased volatility? So you are obviously trading theta but also short volatility?

Happy trading.

I have no clue what theta is and I don't see a need to know. If it isn't broke don't fix it.

The KISS approach is best.

Reply With Quote
     
The following 2 users say Thank You to ron99 for this post:
     

Old September 27th, 2012, 09:52 PM   #260 (permalink)
Elite Member
London/UK
 
Futures Experience: Intermediate
Platform: IBs ladder / Market Delta charts
Broker/Data: IB / IQfeed
Favorite Futures: Bund
 
Posts: 438 since Sep 2012
Thanks: 260 given, 96 received



ron99 View Post
I have no clue what theta is and I don't see a need to know. If it isn't broke don't fix it.

The KISS approach is best.

Theta is the greek name representing time value of the option.

It would be interesting to know from the thousands of options you have sold, the % of those trades you bailed from which were at significant levels in volatility when you entered ie recent lows perhaps? I know you trade off fundamentals, but you also have technical parameters eg delta of <0.03 (i think you have said)...my thoughts were that perhaps volatility could also be used as a parameter for entry. Probably not - you do not close out many before expiry, but there's no harm in raising the point, as volatility is a key driver of price (and pontential to drive price to stop out).

Perhaps someone who trades using the other greeks would be able to comment.

I will refrain from asking too many questions for now.


Last edited by rosho01; September 28th, 2012 at 08:43 PM. Reason: crap english
Reply With Quote
     

Reply



futures.io > Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)
 

Al Brooks: Stop Losing when a Good Trade goes Bad, Correcting Mistakes

Elite only
 

Trading Technologies: ADL hands-on

Dec 13

Normal webinar schedule resumes after the holidays

January

Ernie Chan: Risk Management

Elite only

Dedicated Trading Servers: Advantages/Disadvantages w/sam028

Elite only

An Afternoon with FIO member Massive I

Elite only

Leo Murphy: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Crude Oil (CL) futures inverse pairing options Big Mike Commodities Futures Trading 8 December 12th, 2013 12:00 PM
Recommend futures, options Broker? sam1197 Brokers and Data Feeds 17 March 27th, 2013 01:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 05:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 01:40 PM
Zen-Fire Futures options tici88 Brokers and Data Feeds 1 July 30th, 2011 10:16 AM


All times are GMT -4. The time now is 03:42 AM.

Copyright © 2016 by futures.io. All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
 
no new posts
Page generated 2016-12-09 in 0.16 seconds with 20 queries on phoenix via your IP 50.16.17.16