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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,651 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

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Selling Options on Futures?

Old January 8th, 2014, 09:07 AM   #2831 (permalink)
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datahogg View Post
Ron's strategy for exiting a position is: IM=(Initial Margin), MM=Maintenance margin.
(MM + loss for positon) -----> approach 3 * IM.

But what if you plan on making adjustments to the position instead of exiting? (Maybe buy back puts and sell other puts
further out of the money.) Would the strategy be the same as Ron's strategy for exiting a position?

What are some of the strategies used for making adjustments to a position??

Thanks in advance.

If I have sold puts, and now I am getting close to loss exit point, in the past I have:

1. Sold some calls.

2. Exit existing puts, and sold lower strike puts, same contract month.

3. Exit existing puts, and sold puts, different contract month.

4. Done nothing - ignored the exit signal.


There are pros and cons to each. I have usually regretted whatever decision I made to "fix" the problem. Sometimes, I make the original problem worse.

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Old January 8th, 2014, 09:33 AM   #2832 (permalink)
World'sWorstTrader
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kevinkdog View Post
If I have sold puts, and now I am getting close to loss exit point, in the past I have:

1. Sold some calls.

2. Exit existing puts, and sold lower strike puts, same contract month.

3. Exit existing puts, and sold puts, different contract month.

4. Done nothing - ignored the exit signal.


There are pros and cons to each. I have usually regretted whatever decision I made to "fix" the problem. Sometimes, I make the original problem worse.

Does this mean that your decision point for making adjustments is the same as your exit point??
thanks again.

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Old January 8th, 2014, 09:36 AM   #2833 (permalink)
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datahogg View Post
What are some of the strategies used for making adjustments to a position??

Sometimes if I feel the need to exit, but want to stay in the same market I will roll into strangles, either in the same month or rolling out to a further contract to get more time premium and distance. If the price movement was a spike and things calm down it works fine and the problem is fixed. On the other hand, if it continues to move against you or reverses hard enough you may have to readjust again and it ends up you just prolonged your pain. I don't normally look to do this if I feel the trend that was moving against me is strong and will likely continue.

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Old January 8th, 2014, 10:01 AM   #2834 (permalink)
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datahogg View Post
Does this mean that your decision point for making adjustments is the same as your exit point??
thanks again.

Not necessarily. Sometimes, if I see trouble ahead, but I'm not at the exit point, I'll just roll into a lower strike put. This will probably mean selling more options, to end up the same end profit overall, but it provides me with some breathing room.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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Old January 8th, 2014, 10:06 AM   #2835 (permalink)
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Futures Edge on FIO

ron99 View Post
I have been selling options on futures for years. But it is rare to find others doing it. I was wondering if there are others here doing it.

I have been doing it for 5 years. Learned it from James Cordier's book.

I have sold energy, grain, softs and metal options. Far out of the money. Usually less than 90 days from expiration.

Stranggles? Congratulations. I hope one day I can practice well that strategy. I shall read that book. Can you tell me what´s your anual profit average (% of guaranties commitment)?. Thanks .

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Old January 8th, 2014, 01:13 PM   #2836 (permalink)
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ES Short Inventory Build Up

From the chart attached you can see the big jump to the record high on the last day of the year, I attribute this to last minute window dressing by funds adjusting to make sure they own the years best performers.

Since then though prices have drifted sideways but the Cumulative delta has been steadily declining by some 40000 contracts. This is typical at tops and shows distribution. Heavy selling on the way down then prices float back up due to light buying/no selling, then get pushed back down on more heavy selling.

I do feel a correction coming.

Brit

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Old January 8th, 2014, 05:07 PM   #2837 (permalink)
Market Wizard
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datahogg View Post
Ron's strategy for exiting a position is: IM=(Initial Margin), MM=Maintenance margin.
(MM + loss for positon) -----> approach 3 * IM.

But what if you plan on making adjustments to the position instead of exiting? (Maybe buy back puts and sell other puts
further out of the money.) Would the strategy be the same as Ron's strategy for exiting a position?

What are some of the strategies used for making adjustments to a position??

Thanks in advance.

I never have used MM.

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Old January 8th, 2014, 05:46 PM   #2838 (permalink)
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kevinkdog View Post
At least your pipes did not burst!

@spj77 - next best thing after bubbles: throwing a pot of boiling water into the air. -2 F, probably -20F with wind chill.

Sorry I could not figure out how to embed this.

There have been like 40 + accidents from this over the last few days.

"If I agreed with you, we'd both be wrong."
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Old January 8th, 2014, 06:03 PM   #2839 (permalink)
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value tracker View Post
Stranggles? Congratulations. I hope one day I can practice well that strategy. I shall read that book. Can you tell me what´s your anual profit average (% of guaranties commitment)?. Thanks .

I can't because I do many different types of trading in one account. No easy way to get ROI% for each way of trading.

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Old January 8th, 2014, 07:24 PM   #2840 (permalink)
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addchild View Post
There have been like 40 + accidents from this over the last few days.

??? From hot water burning the thrower? I actually had some big water drops hit me, but they were already frozen by the time they hit me.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread

Last edited by kevinkdog; January 8th, 2014 at 07:33 PM.
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