Selling Options on Futures? (Page 27) - 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:568,918 / 5,728
Last Reply:14 Hours Ago (05:26 PM) 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 October 2nd, 2012, 05:55 PM   #261 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 45,543 since Jun 2009
Thanks: 28,886 given, 80,134 received

On Wednesday, October 10th @ 4:30 PM Eastern US, Carley Garner will be presenting a webinar on futures.io (formerly BMT) which covers Options Trading (specifically Futures, but it will be a broad overview). I've asked Carley to put together a multi-part webinar, so this is Part 1 and will just be "Basics - 101".

You can find more info here:
https://futures.io/elite-circle/23231-webinar-carley-garner-trading-options-101-basics.html

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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

Old October 4th, 2012, 05:29 PM   #262 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,324 since Jul 2011
Thanks: 634 given, 3,904 received

FWIW I know this is not selling options, but I have a recommended trade for you. Buy Oct Milk futures (symbol DA or DC depends on where you trade.) at less than 21.20. Last trade was $21.00. They should expire (cash-settled) above 21.35. Settlement date is Oct 31, 2012. You make $20 per 1 cent.

I was a dairyman for 10+ years. I started trading milk futures 14 years ago. Have made and are currently making good money on milk futures.

There is a complicated USDA formula to determine the final price for the milk contract. 75% of the inputs are already determined for the formula. It is almost impossible for the final price to be below 21.00, But of course nothing is a sure thing.

BTW I just put 50 on for myself.


Last edited by ron99; October 4th, 2012 at 05:56 PM.
Reply With Quote
     
The following user says Thank You to ron99 for this post:
     

Old October 13th, 2012, 12:49 PM   #263 (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



ron99 View Post
FWIW I know this is not selling options, but I have a recommended trade for you. Buy Oct Milk futures (symbol DA or DC depends on where you trade.) at less than 21.20. Last trade was $21.00. They should expire (cash-settled) above 21.35. Settlement date is Oct 31, 2012. You make $20 per 1 cent.

I was a dairyman for 10+ years. I started trading milk futures 14 years ago. Have made and are currently making good money on milk futures.

There is a complicated USDA formula to determine the final price for the milk contract. 75% of the inputs are already determined for the formula. It is almost impossible for the final price to be below 21.00, But of course nothing is a sure thing.

BTW I just put 50 on for myself.

I'd not considered trading Milk before your post. After some research i found the picture below. It shows the changing milk seasonality. Do you also trade the options as well as the futures? It would appear now might be a good time to sell calls.

http://www.fsa.usda.gov/Internet/FSA_File/8_andy_price_volat_diac_jun.pdf

This is a link to the pdf document

Brit

Attached Thumbnails
Selling Options on Futures?-milk.jpg  
Reply With Quote
     

Old October 13th, 2012, 01:18 PM   #264 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,324 since Jul 2011
Thanks: 634 given, 3,904 received

While seasonality has its place when things are normal, this is anything but a normal year for dairymen. Fundamentals this year will override seasonality.

Do not sell calls now. I have been buying futures. Prices will be rising now through the middle of Nov. And they may not stop rising then.

Because of the lack of feed, the high feed prices, and negative profitability of dairying, farmers are exiting the business at a huge rate. Production per cow will drop as dairymen feed less expensive grain. The cows will also milk less because the drought stressed corn silage will not make as milk milk as normal silage.

Dairy cows sent to slaughter have been 5-10% greater than last year. And that will only get worse throughout the US winter.

Prices will only stop rising either when they get high enough to slow demand or the new crop feed from next spring lowers feed cost and increasing feed availability.

Note, because of certain pricing factors I am lowering my projection of the Oct milk price to 21.25. I am projecting Nov to be over 21.50. The CME cash cheese trading that goes into Nov starts on Monday and goes for 5 weeks.

The current cash cheese price is greater than the current Class III futures price. And I doubt that cash cheese is going down now. We are headed into the holiday season when consumption increases. Cheese inventory is 5.8% less than last year and dropping.

There is not a lot of volume in milk options. If you are thinking of doing anything in milk options, sell puts. But do not go more than a few months out.

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

Old October 18th, 2012, 11:00 AM   #265 (permalink)
Trading Apprentice
Toronto/Canada
 
Futures Experience: Advanced
Platform: Sierra Charts
Favorite Futures: Options
 
Posts: 25 since Oct 2012
Thanks: 20 given, 5 received

Futures Edge on FIO
Hi All

New to the board. Great thread. I have sold options many years ago with full service broker, it did not end well due to listening to the broker!
Starting up a new campaign with IB, there margins are high but only discount broker in Canada that does Futures Options right now.

Im looking at selling CL FEB 65 PUTS Delta Apx .036
Any thoughts?

Thanks

Reply With Quote
     

Old October 18th, 2012, 04:53 PM   #266 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,324 since Jul 2011
Thanks: 634 given, 3,904 received


ron99 View Post
While seasonality has its place when things are normal, this is anything but a normal year for dairymen. Fundamentals this year will override seasonality.

Do not sell calls now. I have been buying futures. Prices will be rising now through the middle of Nov. And they may not stop rising then.

Because of the lack of feed, the high feed prices, and negative profitability of dairying, farmers are exiting the business at a huge rate. Production per cow will drop as dairymen feed less expensive grain. The cows will also milk less because the drought stressed corn silage will not make as milk milk as normal silage.

Dairy cows sent to slaughter have been 5-10% greater than last year. And that will only get worse throughout the US winter.

Prices will only stop rising either when they get high enough to slow demand or the new crop feed from next spring lowers feed cost and increasing feed availability.

Note, because of certain pricing factors I am lowering my projection of the Oct milk price to 21.25. I am projecting Nov to be over 21.50. The CME cash cheese trading that goes into Nov starts on Monday and goes for 5 weeks.

The current cash cheese price is greater than the current Class III futures price. And I doubt that cash cheese is going down now. We are headed into the holiday season when consumption increases. Cheese inventory is 5.8% less than last year and dropping.

There is not a lot of volume in milk options. If you are thinking of doing anything in milk options, sell puts. But do not go more than a few months out.

Because of market manipulation, the cash cheese market dropped severely. I now have Oct at 21.08. No way to predict manipulation.

Reply With Quote
     

Old October 18th, 2012, 05:00 PM   #267 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,324 since Jul 2011
Thanks: 634 given, 3,904 received


Mark59 View Post
Hi All

New to the board. Great thread. I have sold options many years ago with full service broker, it did not end well due to listening to the broker!
Starting up a new campaign with IB, there margins are high but only discount broker in Canada that does Futures Options right now.

Im looking at selling CL FEB 65 PUTS Delta Apx .036
Any thoughts?

Thanks

Are you sure nobody else allows option trading in Canada. Because of the super high margins IB requires, paying a little more per trade is far better than having several less contracts to profit from.

Feb 65 puts are probably OK as long as the US doesn't go over the fiscal cliff. Oil is generally strong late year and early in the year. I have them at .028 Delta.

I would go lower and closer in time.

But make sure you have plenty of excess cash in your account. IB will close your positions with a market order if you go on margin call. That could be ugly.

What margin do they want for that position?


Last edited by ron99; October 18th, 2012 at 05:05 PM.
Reply With Quote
     

Old October 18th, 2012, 07:40 PM   #268 (permalink)
Trading Apprentice
Toronto/Canada
 
Futures Experience: Advanced
Platform: Sierra Charts
Favorite Futures: Options
 
Posts: 25 since Oct 2012
Thanks: 20 given, 5 received

Hi Ron

Looks like about 4800 for 2 options!

I have checked with OX & Think or Swim, neither are even taking any more Canadian Accounts. When they start again they say they will not offer Futures.

Also looking at Silver as well, what Markets is everyone trading?

Thanks

Reply With Quote
     

Old October 19th, 2012, 12:10 AM   #269 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,324 since Jul 2011
Thanks: 634 given, 3,904 received


Mark59 View Post
Hi Ron

Looks like about 4800 for 2 options!

I have checked with OX & Think or Swim, neither are even taking any more Canadian Accounts. When they start again they say they will not offer Futures.

Also looking at Silver as well, what Markets is everyone trading?

Thanks

4800? OMG.

At OX it is 1,106.82 for 2.

Silver margin is more than double crude. The highest of any commodity I trade by far. I haven't found any decent ROR selling silver options.

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

Old October 19th, 2012, 05:43 AM   #270 (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



Mark59 View Post
Hi Ron

Looks like about 4800 for 2 options!

I have checked with OX & Think or Swim, neither are even taking any more Canadian Accounts. When they start again they say they will not offer Futures.

Also looking at Silver as well, what Markets is everyone trading?

Thanks

This is real interesting. I have just checked my IB quote for FEB 65P and it works out at $3342 for 2 contracts, but that includes 50% extra margin for being a pension account.

Now I already have a DEC 70/120 strangle on CL which is winding down, so I may have a bit of spare margin on one leg but not to that extent. Also I make the delta at 0.0239 which ties up with Rons figure. Could you recheck your quote Mark59.

I have been annoyed with the IB margins myself but after reading Ron's post earlier about leaving 2 x extra margin it got me thinking, maybe it is not such a bad thing. For example if IB margin was 2000 but OX was 400 and there was a 10% margin increase it would raise the IB to 2200 but what would it raise the OX margin to? If 600 that would be a 50% increase. Extra leverage cuts both ways.

So on reflection I feel more comfortable using 50-60% of available margin when using IB.

Brit

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)
 

NinjaTrader 8: Features and Enhancements, Tips and Tricks

Dec 6
 

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

Elite only
 

Trading Technologies: Algo Design Lab hands-on

Dec 13
     

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 08:23 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 2016-12-07 in 0.15 seconds with 20 queries on phoenix via your IP 54.163.173.253