Selling Options on Futures? - Options on Futures | futures io social day trading
futures io futures trading


Selling Options on Futures?
Updated: Views / Replies:681,287 / 6,283
Created: by ron99 Attachments:732

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • 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.

-- Big Mike, Site Administrator

Reply
 732  
 
Thread Tools Search this Thread
 

Selling Options on Futures?

  #2721 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,677 since Jul 2011
Thanks: 777 given, 4,649 received
Forum Reputation: Legendary

crito, welcome to the thread.

Here is the info from post#2


Quoting 
-When I put a position on I have 2 times the Initial Margin required for cash excess. If the increase in margin plus the loss on the increased premium uses up this cash excess then it is time to exit.

For example, if I sell an option for $100 and the margin required is $500, I will have $1000 excess.

If the combination of margin increasing and premium increasing uses up the $1000 cash excess it is time to exit.

I use only 33% of my balance for margin. I used to use 50% but ended up getting bounced out of trades that ended up being winners far too often.

Like mu2pilot said, Sometimes (most times?) he rolls, sometimes he closes the position, sometimes, if he is close to expiration and he feels confident in the trade, he stays put.

I agree that Karen numbers would have her out of the position before it got to 0.3 delta.

Reply With Quote
 
  #2722 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,677 since Jul 2011
Thanks: 777 given, 4,649 received
Forum Reputation: Legendary


mu2pilot View Post
Ron typically "does something" when a position goes 2x the premium received against him.

Actually that is Liberty Trading's rule. Since I sell so far OTM and for low premium I would be exiting all of the time. For example, if I sold the option for $40 and exited when it doubled I would get out at $80. But there is no reason to exit when it only goes up $40.

Reply With Quote
 
  #2723 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,347 since Jul 2012
Thanks: 1,101 given, 4,257 received
Forum Reputation: Legendary



mu2pilot View Post
Kevinkdog-

How did you compile your list of options? Did you do it manually? Programmatically? Did you use SPAN margin specific to each instrument? Or did you use a general margin requirement for each underlying? Did you use 3x margin to compute your ROI?

I am planning on writing a program (probably in VBA) to pull real time data from a data source, current SPAN margin info and build a ROI matrix of current futures options similar to what you have done and was curious how you did it.

Thanks,

mu2pilot


I use @Dudetooth 's great SPAN spreadsheet. If you look in the SPAN thread, you will find it.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Reply With Quote
 
  #2724 (permalink)
Elite Member
Dallas, TX
 
Futures Experience: Advanced
Platform: T4, Zaner360, TOS
Broker/Data: DeCarley Trading
Favorite Futures: Options
 
Posts: 104 since Sep 2013
Thanks: 133 given, 50 received


kevinkdog View Post
I use @Dudetooth 's great SPAN spreadsheet. If you look in the SPAN thread, you will find it.

I figured you used Dudetooth's spreadsheet to figure SPAN. I have his spreadsheets and was going to use some of his code for part of my program.

But I was wondering if you manually pulled up option chains for each of your markets and plugged them in to Dudetooth's spreadsheet or if you created a "trade finder" of sorts to scan through each market for all options that meet your criteria.

Reply With Quote
 
  #2725 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,347 since Jul 2012
Thanks: 1,101 given, 4,257 received
Forum Reputation: Legendary


mu2pilot View Post
I figured you used Dudetooth's spreadsheet to figure SPAN. I have his spreadsheets and was going to use some of his code for part of my program.

But I was wondering if you manually pulled up option chains for each of your markets and plugged them in to Dudetooth's spreadsheet or if you created a "trade finder" of sorts to scan through each market for all options that meet your criteria.

For each instrument, I basically calculate the ROI for each option. Then, I filter the results for delta, ROI, and a minimum amount of premium. I run over 3,000 individual options a day, and it takes an hour or two. But, it does let me look at a variety of ROIs.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Reply With Quote
The following user says Thank You to kevinkdog for this post:
 
  #2726 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,347 since Jul 2012
Thanks: 1,101 given, 4,257 received
Forum Reputation: Legendary


mu2pilot View Post
I figured you used Dudetooth's spreadsheet to figure SPAN. I have his spreadsheets and was going to use some of his code for part of my program.

But I was wondering if you manually pulled up option chains for each of your markets and plugged them in to Dudetooth's spreadsheet or if you created a "trade finder" of sorts to scan through each market for all options that meet your criteria.

So I basically run a complete sweep, then filter on what I am interested in. I could make it a lot better by just skipping options where I know the delta will be too high. That would greatly reduce the time it took to run. Maybe I'll eventually do that...

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Reply With Quote
The following user says Thank You to kevinkdog for this post:
 
  #2727 (permalink)
Elite Member
amsterdam
 
Futures Experience: Intermediate
Platform: IB & TS
Favorite Futures: short fut. opt., fut. spreads, div. stocks
 
Posts: 57 since Feb 2012
Thanks: 3 given, 26 received

thanks guys,

i'm looking at a coffee strangle, what do you think?
the put would be triggy, the call seems ok.
anybody know the fundamentals on coffee, would we have made a bottom yet? if i look at the continues data coffee hasn't been this low for mannnnny years but againd that doesn't say it can't go lower ;-)

I like to put (green) lines in my charts from opening the position (down for put, or up for call) to the exp. date.
so the fut should stay above the shorted put line or below the shorted call line as we move foward. (I let it cross in the first few weeks)
Than copy the line (create parallel and place it at bad locations in the past, as you can see the put has a fair change of be a looser, the call not so much). And yes i know time decay is not linear.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


just saw at the page before ron mentioned the march call 135
perhaps sell the call & wait for a downswing to sell the put.

just found on page 32 a link to the monthly ice pdf
https://www.theice.com/publicdocs/futures_us/ICE_Monthly_Softs_Fast_Facts.pdf

although i still think the put is a risky trade, this is interesting.
does anybody know at what price farmers start burning their stock out of frustration? (the minimum production costs?)
A part of it in italic...
Coffee open interest has been falling lately
and commercials are holding a rather long
position. What is important to note about
this is that the increase in the commercial
net position is not from shorts increasing
their holdings, but rather longs increasing
the size of their coverage. This would imply
less worry about prices falling going forward
and more risk of prices going higher. Given
how far the market has fallen already it
makes sense fundamentally, even though
there are no strong indicators yet the
market has reached bottom.




Interested in your thoughts,

regards.


@Ron99, you mentioned you like at least 2%/month, is that based on the maint. margin for the contract or do you take the 33% or 66% 'spare money' in account?
lets take this above coffee call as a sample
premium is 0.28 * 375 = $105, days 55, MM (ib) = $731
so it makes %105/ $731 in 55 days = 14.9% in 55days, which is 14.9% * (31 / 55d ) = 8.39%/month
but that 8.39% is based on the MM at opening, you use only 33% of your money (i still use 50%)
so taking that in account you have $731 * 3 = $2193 sitting in the bank (for margin safety) to make $105 (in the 55days)
that gives this trade 8.39 / 3 = 2.799% /month, (or 33.5%/year) which is still nice.


Last edited by crito; December 29th, 2013 at 11:57 AM. Reason: added ice pdf link + text
Reply With Quote
 
  #2728 (permalink)
Elite Member
amsterdam
 
Futures Experience: Intermediate
Platform: IB & TS
Favorite Futures: short fut. opt., fut. spreads, div. stocks
 
Posts: 57 since Feb 2012
Thanks: 3 given, 26 received

Hi,

here is another interesting one (also mentioned by kevin), more dangerous but well we get paid for fear...
in case you consider this trade, you may want to read the conversation on this thread (first page) since the NG march-april can be a very rough ride.
https://futures.io/commodities-futures-trading/29985-looking-spread-traders.html


Short NGh14 call 6.0 or 6.5 (i guess the 6.5 is the better/safer candidate),
Looking forward to your replies.

oh, i guess you could consider a spread for this one, either C6-C6.5 or C6-C7, etc

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


@kevin, when did you sell your NGg14 calls?


Last edited by crito; December 29th, 2013 at 10:14 AM. Reason: added spread idea
Reply With Quote
 
  #2729 (permalink)
One who has little to say
Cabo San Lucas & or Wichita Kansas
 
Futures Experience: Advanced
Platform: MC / OEC / Jigsaw Tools
Broker/Data: OX and OEC
Favorite Futures: ZB and ES
 
Posts: 15 since Jul 2009
Thanks: 47 given, 29 received


mu2pilot View Post


I encourage you to take the time to read this entire thread. There are numerous golden nuggets for your discovery. Ron typically "does something" when a position goes 2x the premium received against him. Sometimes (most times?) he rolls, sometimes he closes the position, sometimes, if he is close to expiration and he feels confident in the trade, he stays put.

mu2pilot

I second that, I don't post here much as I subscribe to the theory is you don't have much to add why add something of no value.

However, The above comment is really important, if you have a trade that goes against you or not as planned, skimming through the pages of this thread will either make you see something you personally overlooked, or glean some insight from a number of traders who have been doing this for a number of years.

I personally think this might one of the best threads on this forum, and this is probably the best forum on the interwebs for trading!


I've been trading for 15 years and selling options for 8. I would state that when you start out at this game, take is slow and keep your size manageable. 2 or 3 contracts going not as planned is a lot easier to manage than 5 or 10 or more.

Thanks to all the contributors of this thread and forum!

Reply With Quote
The following 6 users say Thank You to nomad4x for this post:
 
  #2730 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: ES, NQ, CL, /6E futures options.
 
Posts: 267 since Oct 2012
Thanks: 126 given, 75 received

Implied Volatility (IV)


Friday's close IV for /ES futures was 10.12 (or 8% of the 52 week high).
Friday's close IV for /CL futures was 13.53 ( or 0% of the 52 week high).
Friday's close IV for /NQ futures was 11.77 ( or 8% of the 52 week high).

Presently does not look like a time to sell premium.

Probably will change soon.

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

Reply



futures io > > > > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



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

Battlestations: Show us your trading desks and win $750 in prizes

August
 

Ask Me Anything (AMA) w/Rod Casilli @ Collective2

Aug 23
 

Prototyping Python Strategies (part 3, Live Trading) w/Ran Aroussi [1PM ET]

Elite only
 

Develop Strategies and Perfect Execution w/Brannigan Barrett @ Axia Futures

Elite only

Introduction to Phillip Capital futures brokerage services

Aug TBD

How Monte Carlo Analysis Can Help Your Trading w/Kevin Davey

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 11:00 AM
Recommend futures, options Broker? sam1197 Reviews of Brokers and Data Feeds 17 March 27th, 2013 12:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 04:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 12:40 PM
Zen-Fire Futures options tici88 Reviews of Brokers and Data Feeds 1 July 30th, 2011 09:16 AM


All times are GMT -4. The time now is 11:40 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@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 2017-08-18 in 0.10 seconds with 20 queries on phoenix via your IP 23.20.166.142