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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:567,999 / 5,727
Last Reply:Yesterday (12:40 PM) Attachments:642

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Selling Options on Futures?

Old December 30th, 2013, 11:54 PM   #2751 (permalink)
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Does anyone know the SPAN symbol for Live Cattle. Can't seem to find it anywhere (I would think it would be LE or LC). Thanks.

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Old December 31st, 2013, 12:04 AM   #2752 (permalink)
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eudamonia View Post
Does anyone know the SPAN symbol for Live Cattle. Can't seem to find it anywhere (I would think it would be LE or LC). Thanks.

48

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Old December 31st, 2013, 12:42 AM   #2753 (permalink)
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SMCJB View Post
Sorry wrong quote first time



Go to page 252 of this thread and read forward.

Thanks. I've read this thread multiple times, including those passages. Yes, selling naked options in NG is not something I take lightly. But given the substantial move we've made since the 2011 low and since the most recent low 8 weeks ago, I find it hard to think this market is going to exceed $7 in the next 60 days.

I also realize that the market doesn't have to hit my strike to put massive amounts of heat on a position and that the market doesn't care about what I think or where I think it is unlikely to go. I *do* believe that the unthinkable can happen at any time and stand ready to make adjustments when needed.

I also diversify across several markets and positions. So, saying "sell the hell out of them" was a bit too aggressive of rhetoric.

I do think that with the recent market movement and volatility that there are good values in NG and have already sold some 6.9 calls and will be looking at selling some 7.4-7.6 calls tomorrow.

mu2pilot

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Old December 31st, 2013, 12:45 AM   #2754 (permalink)
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mu2pilot View Post
Thanks. I've read this thread multiple times, including those passages. Yes, selling naked options in NG is not something I take lightly. But given the substantial move we've made since the 2011 low and since the most recent low 8 weeks ago, I find it hard to think this market is going to exceed $7 in the next 60 days.

I also realize that the market doesn't have to hit my strike to put massive amounts of heat on a position and that the market doesn't care about what I think or where I think it is unlikely to go. I *do* believe that the unthinkable can happen at any time and stand ready to make adjustments when needed.

I also diversify across several markets and positions. So, saying "sell the hell out of them" was a bit too aggressive of rhetoric.

I do think that with the recent market movement and volatility that there are good values in NG and have already sold some 6.9 calls and will be looking at selling some 7.4-7.6 calls tomorrow.

mu2pilot

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Old December 31st, 2013, 06:29 AM   #2755 (permalink)
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Futures Edge on FIO

ron99 View Post
Actually I am having a very good year.

Counting only positions put on in 2012 but not currently open

I made 13 trades for 410 contracts to buy options. Lost 60k (I was very profitable on these last year)
I made 15 trades for 128 contracts to put on future spreads. Lost 4k.
I made 62 trades for 386 contracts to buy or sell futures. Made 149k.
I made 136 trades for 1,621 contracts to sell options. Made 52k. Net $31.85 per contract.

Of the 136 trades to sell options, 135 of them I rode to expiration and they ended at zero premium. Full profit. The only loser (20 contracts Aug LH 86 put) I bailed at a 5k

loss, but if I had rode it to expiration, it too would have ended at zero.

The vast majority of short options were sold at a delta of 0.0100 or less. The LH loser trade was done because of a seasonal trend that went against me at first but then

followed the seasonal. It was a far higher delta.

Hi Ron,

last year you mentioned your results, would you be so kind to share the 2013 results with us?

thanks.

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Old December 31st, 2013, 11:14 AM   #2756 (permalink)
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FYI

The last 5 first trading days of the new year the March ES contract has been up double digits.

09 +25.50
10 +18.00
11 +12.25
12 +19.50
13 +37.00 This was affected by Congress waiting until Jan 1st to pass bill.

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Old December 31st, 2013, 11:37 AM   #2757 (permalink)
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Ratio Spread


nomad4x View Post
?

The models look really good, You have probabilities of 100% expiring OTM and delta's around 0.00 However, as we saw earlier this month, a severe cold snap and this market can go bonkers. Price very well might not eclipse 7.00 but the value of your sold option could skyrocket by many multiples. 57 Days is a lot of time for this market. I have wrote some Feb 8.00 calls 2 weeks ago when I could get $40.00 for them. You might look at a ratio spread to absorb some of the price going against your position. .

You mentioned the ratio spread. Has the ratio spread worked well for you? Does it have an advantage over the
naked put??

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Old December 31st, 2013, 11:50 AM   #2758 (permalink)
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ron99 View Post
FYI

The last 5 first trading days of the new year the March ES contract has been up double digits.

09 +25.50
10 +18.00
11 +12.25
12 +19.50
13 +37.00 This was affected by Congress waiting until Jan 1st to pass bill.

I've got one bear call spread at 1880/1890 that I'm going to sell at a loss and pay for it by adding to my short puts. This is the last position I currently have on the call side of the equity indexes.


Last edited by mu2pilot; December 31st, 2013 at 12:27 PM.
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Old December 31st, 2013, 01:48 PM   #2759 (permalink)
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datahogg View Post
You mentioned the ratio spread. Has the ratio spread worked well for you? Does it have an advantage over the
naked put??


The only reason I like a ratio spread vs. naked, it beats hanging on with a naked position. Last month I had crude make me hang on for dear life as it was teetering right around mt 200% stop (never hit) I had a similar trade with NatGas last month, I chose to hang on (was sitting almost 4 points out of the money had plenty of margin and decided not to take the loss )as opposed to liquidating...

I've been doing some testing on them. I'm making roughly the same amount of money on a 1:5 ratio spread vs. selling 10 naked. While I have roughly the same b/e point. I've had 2 where I bought the calls back at 0.01, with the remaining call I bought rallied and I've made a few 100 dollars more. That's skewing my results.

I'll let you know my results when i can make some good comparisons on the subject.

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Old December 31st, 2013, 02:28 PM   #2760 (permalink)
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Ratio Spread vs Naked Shorts



nomad4x View Post
The only reason I like a ratio spread vs. naked, it beats hanging on with a naked position. Last month I had crude make me hang on for dear life as it was teetering right around mt 200% stop (never hit) I had a similar trade with NatGas last month, I chose to hang on (was sitting almost 4 points out of the money had plenty of margin and decided not to take the loss )as opposed to liquidating...

I've been doing some testing on them. I'm making roughly the same amount of money on a 1:5 ratio spread vs. selling 10 naked. While I have roughly the same b/e point. I've had 2 where I bought the calls back at 0.01, with the remaining call I bought rallied and I've made a few 100 dollars more. That's skewing my results.

I'll let you know my results when i can make some good comparisons on the subject.

In my observation, ratio spread and naked short options are strategies for different type of markets. Naked short is usually employed when selling against trend (existing or anticipated due to seasonal behavior) or selling outside trading range type of behavior. While ratio spread is more appropriate for either very high volatility (when it can be sold for credit and still give lot of safety cushion) or for a slow trend situation when you expect some more movement but not too much (and it would be done for debit in this case).

I personally reserve ratio spread for very high volatility situation and I posted an actual trade last week showing example of that for Natural Gas.

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