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


Selling Options on Futures?
Updated: Views / Replies:671,487 / 6,238
Created: by ron99 Attachments:729

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
 729  
 
Thread Tools Search this Thread
 

Selling Options on Futures?

  #2991 (permalink)
Market Wizard
Houston TX
 
Futures Experience: Advanced
Platform: XTrader
Broker/Data: Advantage Futures
Favorite Futures: Energy
 
Posts: 1,937 since Dec 2013
Thanks: 1,629 given, 2,947 received
Forum Reputation: Legendary


Quoting 
An added lift in the natural gas market comes on chatter that some power companies were getting squeezed, and that may be providing a new segment of buyers into the fray.

Rumor is utilities are scrambling to get their hands on physical molecules rather than financial derivs, although price action today doesn't reflect that.

Chicago/Michigan etc prices are up $1 because of the pipeline explosion

Reply With Quote
The following user says Thank You to SMCJB for this post:
 
  #2992 (permalink)
Market Wizard
Houston TX
 
Futures Experience: Advanced
Platform: XTrader
Broker/Data: Advantage Futures
Favorite Futures: Energy
 
Posts: 1,937 since Dec 2013
Thanks: 1,629 given, 2,947 received
Forum Reputation: Legendary


ron99 View Post
NG margin going up Monday and now it is going up Tuesday too. So that is up 30% from Thursday's rate to Tuesday's rate.

ICE is going up Wednesday as well... 3rd day in a row. Haven't heard about CME

Reply With Quote
 
  #2993 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,651 since Jul 2011
Thanks: 770 given, 4,580 received
Forum Reputation: Legendary


As a follow up to my post 2977 I did another study using ES puts a month apart in expiration. I used a longer time frame and options that had a higher DTE.

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


The results? The same surprising answer.

The Sep puts, even though they were 28 days closer to expiration, had a margin increase far more than options 28 more DTE for options with about the same premium value at the start.

The Sep 1400 puts had a premium increase less than Oct 1400 puts but the margin for the Sep 1400 went up more than the Oct 1400. So the premium and margin increase for both 1400s was about the same. But since the margin was 1/2 for the Sep you would have had on twice as many. So the hit on your account would have been twice as much if you did Sep 1400s instead of Oct 1400s.

Reply With Quote
The following 4 users say Thank You to ron99 for this post:
 
  #2994 (permalink)
Trading Apprentice
Detroit MI/USA
 
Futures Experience: Beginner
Platform: OEC
Favorite Futures: CL,6E,6B,ES
 
Posts: 21 since Jan 2014
Thanks: 12 given, 9 received


ron99 View Post
As a follow up to my post 2977 I did another study using ES puts a month apart in expiration. I used a longer time frame and options that had a higher DTE.

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


The results? The same surprising answer.

The Sep puts, even though they were 28 days closer to expiration, had a margin increase far more than options 28 more DTE for options with about the same premium value at the start.

The Sep 1400 puts had a premium increase less than Oct 1400 puts but the margin for the Sep 1400 went up more than the Oct 1400. So the premium and margin increase for both 1400s was about the same. But since the margin was 1/2 for the Sep you would have had on twice as many. So the hit on your account would have been twice as much if you did Sep 1400s instead of Oct 1400s.

So from what I'm gathering - that its better to do further out DTE on ES puts (80+days are preferable to 50+ days), and then buy them back after a certain ROI? This way you get better resistance on your Margin requirements with big swings down in the S&P, and you get same premium for further OTM strike prices.

Reply With Quote
 
  #2995 (permalink)
Trading Apprentice
Bristol, TN USA
 
Futures Experience: Intermediate
Platform: TnT Live, OX, Zaner
Broker/Data: OEC
Favorite Futures: ES, CL, ZW, ZB, 6C, ZS
 
Posts: 15 since Jan 2014
Thanks: 20 given, 1 received


ron99 View Post
As a follow up to my post 2977 I did another study using ES puts a month apart in expiration. I used a longer time frame and options that had a higher DTE.

The results? The same surprising answer.

The Sep puts, even though they were 28 days closer to expiration, had a margin increase far more than options 28 more DTE for options with about the same premium value at the start.

The Sep 1400 puts had a premium increase less than Oct 1400 puts but the margin for the Sep 1400 went up more than the Oct 1400. So the premium and margin increase for both 1400s was about the same. But since the margin was 1/2 for the Sep you would have had on twice as many. So the hit on your account would have been twice as much if you did Sep 1400s instead of Oct 1400s.

Good observation! Exactly why I have a rule of no more than 50% of my account is used for total margin.

Reply With Quote
 
  #2996 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,651 since Jul 2011
Thanks: 770 given, 4,580 received
Forum Reputation: Legendary


Mo111 View Post
So from what I'm gathering - that its better to do further out DTE on ES puts (80+days are preferable to 50+ days), and then buy them back after a certain ROI? This way you get better resistance on your Margin requirements with big swings down in the S&P, and you get same premium for further OTM strike prices.

In my other study I compared 35 DTE to 63 DTE. The 63s were better.

But if you put on ES puts 80+ DTE and keep them to expiration your ROI will be worse. So you need to sell at a high enough premium to allow you to exit early and still have enough net profit to keep the ROI decent.

Reply With Quote
The following user says Thank You to ron99 for this post:
 
  #2997 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,651 since Jul 2011
Thanks: 770 given, 4,580 received
Forum Reputation: Legendary


TNGreg View Post
Good observation! Exactly why I have a rule of no more than 50% of my account is used for total margin.

I used to use 50%. Got forced out too many times and suffered losses.

I now use 33% as my limit for Initial Margin.

Reply With Quote
The following user says Thank You to ron99 for this post:
 
  #2998 (permalink)
Trading Apprentice
Bristol, TN USA
 
Futures Experience: Intermediate
Platform: TnT Live, OX, Zaner
Broker/Data: OEC
Favorite Futures: ES, CL, ZW, ZB, 6C, ZS
 
Posts: 15 since Jan 2014
Thanks: 20 given, 1 received


ron99 View Post
I used to use 50%. Got forced out too many times and suffered losses.

I now use 33% as my limit for Initial Margin.

Good food for thought. As I am still only on paper and have not had that happen yet, I will see if I can adjust to a safer rule.

Reply With Quote
 
  #2999 (permalink)
Trading for Fun
Lancashire UK
 
Futures Experience: Intermediate
Platform: Tradestation, Interactive Brokers, OX
Favorite Futures: ES Z CL EURJPY
 
Posts: 52 since Jan 2013
Thanks: 42 given, 30 received


ron99 View Post
But if you put on ES puts 80+ DTE and keep them to expiration your ROI will be worse. So you need to sell at a high enough premium to allow you to exit early and still have enough net profit to keep the ROI decent.

Hi ron99,

Say you sell an option at 22.50 with 79 dte and you intend to buy to close at 5.00. Do you have any way of estimating when that might happen so you can approximate your ROI?

Or do you just monitor the ROI and exit when it's acceptable?

Another question: you gave an example of an ES1400P at 51 dte and an ES 1250P at 79 dte. Do you know what the deltas were for those options?


Thanks in advance,

Chris

Reply With Quote
 
  #3000 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,651 since Jul 2011
Thanks: 770 given, 4,580 received
Forum Reputation: Legendary



MGBRoadster View Post
Hi ron99,

Say you sell an option at 22.50 with 79 dte and you intend to buy to close at 5.00. Do you have any way of estimating when that might happen so you can approximate your ROI?

A way to approximate that would be to look at options with the same strike and less DTE and see about when they hit your 5.00.

Or do you just monitor the ROI and exit when it's acceptable?

I do do that.

Another question: you gave an example of an ES1400P at 51 dte and an ES 1250P at 79 dte. Do you know what the deltas were for those options?

1.04 And 0.63

Thanks in advance,

Chris

.

Reply With Quote
The following user says Thank You to ron99 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)

July Journal Challenge w/$1100 in prizes from TopstepTrader

July
 

An Afternoon with FIO member Softsoap

Elite only

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

August
 

Extended Ask Me Anything w/Brett Steenbarger

Elite only

Prototyping Python Strategies (part 3) w/Ran Aroussi

Elite only

Brannigan Barrett w/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 04:58 AM.

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 2017-07-25 in 0.08 seconds with 19 queries on phoenix via your IP 54.158.7.152