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Selling Options on Futures?
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Selling Options on Futures?

  #2761 (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

Now would be an interesting moment to leg in to those naked NGh calls and make it a ratio spread...

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  #2762 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
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NG margins going up 9.5% on Monday.

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  #2763 (permalink)
One who has little to say
Cabo San Lucas & or Wichita Kansas
 
Futures Experience: Advanced
Platform: MC / OEC / Jigsaw Tools
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seemasp View Post
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.

No disagreement here, especially NatGas of late. The aforementioned comment was sort of a run on my prior 3 posts. I should have cleared that up.

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  #2764 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
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Favorite Futures: Options on Futures
 
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I live in northern Ohio. Monday night we are forecast to be -5 to -9 degrees. Depends on the forecaster. The high Tuesday is forecast to be +2 to +10.

I would be careful selling NG calls with this happening. There will be some huge withdrawals from NG storage soon.

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  #2765 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
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Favorite Futures: Options on Futures
 
Posts: 2,719 since Jul 2011
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Some findings on the recent NG calls. I had rolled to a higher strike and added more positions to cover the losses of the lower strike.

Mar NG futures were 4.473 on 12/19. On 12/23 they were 4.500. Up .027.
The Mar 5.00 call on 12/19 was .194. The 6.00 was .085.
On 12/23 the 5.00 was .218. Up .024. The 6.00 was .112. Up .027. More than the 5s. That's crazy that the 6s went up more than the 5s and the same as futures.

The 7s went from .040 to .062. Up .022. Way too much compared to futures for an option this far OTM.

This is why rolling didn't work this time. The 7s only lost $20 per contract less than 5s. So rolling to more positions at 7 than 5s actually lost me more money not less.

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  #2766 (permalink)
Elite Member
Portland OR
 
Futures Experience: Intermediate
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ron99 View Post
Some findings on the recent NG calls. I had rolled to a higher strike and added more positions to cover the losses of the lower strike.

Mar NG futures were 4.473 on 12/19. On 12/23 they were 4.500. Up .027.
The Mar 5.00 call on 12/19 was .194. The 6.00 was .085.
On 12/23 the 5.00 was .218. Up .024. The 6.00 was .112. Up .027. More than the 5s. That's crazy that the 6s went up more than the 5s and the same as futures.

The 7s went from .040 to .062. Up .022. Way too much compared to futures for an option this far OTM.

This is why rolling didn't work this time. The 7s only lost $20 per contract less than 5s. So rolling to more positions at 7 than 5s actually lost me more money not less.

I think that happened because volatility went thru' the roof. Even though the volatility of the far OTM options is higher than the nearer ones, this time it was way too higher. I looked at that and decided to fold instead of rolling (had one too many contracts, anyway), took it in the shorts but still ended up for 2013.

2013 was my first year with futures options (been doing equity/index options for a few years) and was nicely placed till that week of December .... but still ended the year in positive territory.

Thank you to the forum and especially to Ron, Kevin and the newer posters too! Learning new tricks everyday.

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  #2767 (permalink)
One who has little to say
Cabo San Lucas & or Wichita Kansas
 
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ron99 View Post
NG margins going up 9.5% on Monday.

Where can I find this information? I notice you're always on top of these decrease / increases. I did a quick look around at broker and exchanges and I'm not looking in the right place. A point in the right direction would be appreciated.

Note: I've probably missed this in one of the nearly 300 pages of this thread. Searching margin, margin increase comes up with endless results.

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  #2768 (permalink)
Market Wizard
Cleveland, OH
 
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nomad4x View Post
Where can I find this information? I notice you're always on top of these decrease / increases. I did a quick look around at broker and exchanges and I'm not looking in the right place. A point in the right direction would be appreciated.

Note: I've probably missed this in one of the nearly 300 pages of this thread. Searching margin, margin increase comes up with endless results.

Post #2 (Quick Summary) has the links.

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  #2769 (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


ron99 View Post
Post #2 (Quick Summary) has the links.


I saw that, Both the ICE and CME links are dead. When/if I find the proper link i"ll post it.

It looks like the old link is now this link http://www.cmegroup.com/tools-information/communications/sub-center.html Oddly enough if you click on the link on page 2 it gives you a error page. in the bulletin on the CME sight it has the old link and redirects to the new link. Odd Stuff...


Last edited by nomad4x; January 2nd, 2014 at 10:40 AM.
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  #2770 (permalink)
Market Wizard
Houston, TX
 
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ron99 View Post
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.

Nice rally on Tuesday but not looking so great today so far.
I dabbled with some 1830/50 weekly fences (Jan 3rd), sold half with a decent profit going into close Tuesday.
May add some 1820/40s again here

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