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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,892 / 5,734
Last Reply:Yesterday (01:01 AM) Attachments:642

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Selling Options on Futures?

Old January 16th, 2014, 05:01 AM   #2881 (permalink)
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live cattle

Hello,

Does anyone have any good live cattle fundamental analyst links they can post? Bit of a sharp rally in prices.


(btw ron I have access to that info)

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Old January 16th, 2014, 09:45 AM   #2882 (permalink)
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EIA Natural Gas Storage Report Expectations 16-Jan-14 for week ending 10-Jan-14

The largest survey I see (40 respondents) shows
Average -304
Median -302
Range -294 to -321
Std Dev 6

This week last year -156
5yr Average -159

Actual report will be available at Weekly Natural Gas Storage Report - EIA at 1030 EPT

These are huge numbers, and potentially record setting.
At time of writing 8:43 EPT, NG market is already up almost 16c (3.7%) so it could be an 'interesting' day.

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Old January 16th, 2014, 10:09 AM   #2883 (permalink)
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rosho01 View Post
Hello,

Does anyone have any good live cattle fundamental analyst links they can post? Bit of a sharp rally in prices.


(btw ron I have access to that info)

I had used Rich Nelson at Futures Mag but they quit printing his articles a month ago. I now use Hightower that I get from OX. I think DeCarley has Hightower too.

If you go to the futures page on barchart they have articles below the quotes.
Barchart.com - Futures Prices for Live Cattle

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Old January 16th, 2014, 11:31 AM   #2884 (permalink)
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SMCJB View Post
EIA Natural Gas Storage Report Expectations 16-Jan-14 for week ending 10-Jan-14

The largest survey I see (40 respondents) shows
Average -304
Median -302
Range -294 to -321
Std Dev 6

This week last year -156
5yr Average -159

Actual report will be available at Weekly Natural Gas Storage Report - EIA at 1030 EPT

These are huge numbers, and potentially record setting.
At time of writing 8:43 EPT, NG market is already up almost 16c (3.7%) so it could be an 'interesting' day.

-287

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Old January 16th, 2014, 11:48 AM   #2885 (permalink)
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Futures Edge on FIO
NG, the Russian Roulette of Trading
1 min bars. 3 bars in 10 mins have a >0.5% range
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

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Old January 16th, 2014, 12:33 PM   #2886 (permalink)
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SMCJB View Post
NG, the Russian Roulette of Trading
1 min bars. 3 bars in 10 mins have a >0.5% range

Yikes. I am short some March 6.9 and 7.4 calls. I sold the 6.9s @ .016 and the 7.4s @ .009. I'm underwater quite a bit.

I know that Ron recommended against selling March calls, although that was a few days after I sold them. At the time I asked why I shouldn't sell the "hell out of them". I did sell a fair amount, but not as many as I was going to.

In addition to Ron's sage advice about dealing with positions going against us, Harvard16 has shared his experiences when he held positions last April.

I'm saying all this to get input from everyone as to how far I let this go before doing something and to let everyone ride along and learn with me.

The BidAsk on the 6.9 is currently .026/.035 and on the 7.4 it is .011/.030. What would you do?

mu2pilot

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Old January 16th, 2014, 04:29 PM   #2887 (permalink)
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Exit


mu2pilot View Post
Yikes. I am short some March 6.9 and 7.4 calls. I sold the 6.9s @ .016 and the 7.4s @ .009. I'm underwater quite a bit.

I know that Ron recommended against selling March calls, although that was a few days after I sold them. At the time I asked why I shouldn't sell the "hell out of them". I did sell a fair amount, but not as many as I was going to.

In addition to Ron's sage advice about dealing with positions going against us, Harvard16 has shared his experiences when he held positions last April.

I'm saying all this to get input from everyone as to how far I let this go before doing something and to let everyone ride along and learn with me.

The BidAsk on the 6.9 is currently .026/.035 and on the 7.4 it is .011/.030. What would you do?

mu2pilot

Are you near your exit point?

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Old January 16th, 2014, 04:57 PM   #2888 (permalink)
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mu2pilot View Post

I'm saying all this to get input from everyone as to how far I let this go before doing something and to let everyone ride along and learn with me.

The BidAsk on the 6.9 is currently .026/.035 and on the 7.4 it is .011/.030. What would you do?

mu2pilot

Hi - You're getting hurt by a very sharp rise in implied volatility. The $6.90 and $7.40 calls are about 80% and 90% IV, respectively. That's the bad news. The good news is you're not taking much heat due to a rise in the underlying.

Assuming you're not 'over-positioned' (whatever that means for your circumstances), I'd hang on a bit. IV and the underlying can certainly rise if people keep milking the cold wxr story, but time decay will soon accelerate and mean reversion (in IV) is also on your side.

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Old January 16th, 2014, 05:05 PM   #2889 (permalink)
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datahogg View Post
Are you near your exit point?



My exit points on the 6.9 call are (I sold @ $0.016) :

2X - 6.9c - $0.048
3X - 6.9c - $0.064

My 3x exit points are (I sold @ $0.009):

2X - 7.4c - $0.027
3X - 7.4c - $0.036

So, I was close to the 2X exit on 7.4c, but still have some breathing room in the 6.9 calls.

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Old January 16th, 2014, 05:22 PM   #2890 (permalink)
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mu2pilot View Post
My exit points on the 6.9 call are (I sold @ $0.016) :

2X - 6.9c - $0.048
3X - 6.9c - $0.064

My 3x exit points are (I sold @ $0.009):

2X - 7.4c - $0.027
3X - 7.4c - $0.036

So, I was close to the 2X exit on 7.4c, but still have some breathing room in the 6.9 calls.

If you don't want to exit but also want some protection again continued move higher, you can buy some lower strike (and lower volatility) calls to convert the naked calls into ratio spread position. Like for every few (5-6) naked calls buy 1 call of about 1 dollar lower strike. That will reduce impact of margin increase at expense of lower profit...Or you can sell some more of the naked calls but use the proceeds to buy lower strike calls again to make it ratio spread. Like if you had 10 7.4 call naked, sell 6 more at 3 cents and use 18 cents to buy 3 6 calls to make 1 to 5 (approx) 6 to 7 ratio spread...Numbers are not exact and you have play with it. There will not be any more margin need and margin increase will be quite less compared to naked position. Only drawback is if NG shoots higher 2 dollar in a week then you will lose big which you will also with naked call position....

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