Selling Options on Futures? (Page 301) - Options on Futures | futures.io
futures.io futures trading
 

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures


Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:570,161 / 5,734
Last Reply:December 9th, 2016 (01:01 AM) Attachments:642

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • 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, and we will never resell your private information.

-- Big Mike
     

Reply
 642  
 
Thread Tools Search this Thread

Selling Options on Futures?

Old January 28th, 2014, 01:01 PM   #3001 (permalink)
Trading for Fun
St Paul, MN, USA
 
Futures Experience: Advanced
Platform: Abacus
Broker/Data: RJO, Interactive Brokers
Favorite Futures: Commodity Futures & Options
 
Posts: 189 since Jan 2014
Thanks: 108 given, 171 received


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?

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

Chris

You could also just plug it into an options calculator and mess around with the three variables - Underlying Price, DTE and IV and you'll see what it takes to get that option down to 5.00. Some options calculators have graphics, some don't. Of the ones that do, it's nice to have a 'slider' so you can quickly move a variable and see the payoff diagram change shape (and the price of your option rise or fall).

Reply With Quote
     

Old January 28th, 2014, 01:09 PM   #3002 (permalink)
Elite Member
Belgium
 
Futures Experience: Advanced
Platform: Ninjatrader
Broker/Data: Mirus Futures/zen-Fire
Favorite Futures: ES
 
Posts: 1 since May 2010
Thanks: 0 given, 0 received

thank you

good information

Reply With Quote
     

Old January 28th, 2014, 01:22 PM   #3003 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,330 since Jul 2011
Thanks: 634 given, 3,910 received



CafeGrande View Post
You could also just plug it into an options calculator and mess around with the three variables - Underlying Price, DTE and IV and you'll see what it takes to get that option down to 5.00. Some options calculators have graphics, some don't. Of the ones that do, it's nice to have a 'slider' so you can quickly move a variable and see the payoff diagram change shape (and the price of your option rise or fall).

What free options calculator would you recommend for options on futures?

Reply With Quote
     

Old January 28th, 2014, 01:59 PM   #3004 (permalink)
Trading for Fun
St Paul, MN, USA
 
Futures Experience: Advanced
Platform: Abacus
Broker/Data: RJO, Interactive Brokers
Favorite Futures: Commodity Futures & Options
 
Posts: 189 since Jan 2014
Thanks: 108 given, 171 received


ron99 View Post
What free options calculator would you recommend for options on futures?

EDIT - scratch the first suggestion below from the Options Industry Council. While they have the binomial model and a dropdown menu for futures, they don't let you enter a custom DTE. It's just populated with the 3rd Fridays for stock options.

-----------------------------------------
This link: Historical and Implied Volatility

It will open on a 'tools & resources' tab, but you need to mouseover to the white tab heading, select calculators > advanced > binomial American model. Zero out anything related to dividends, make the interest rate zero or no more than .025% (it doesn't really matter).

The calculator you'll be using is from ivolatility.com. It's the same one they provide to their Advanced Futures Options customers, except the paid version has futures prices and DTE pre-loaded.

You can also register and use for free the calculator and other CME futures options related tools at Quikstrike.

Basically, you just want to make sure you're using a calculator that handles American style (early exercise) options properly. There are dozens of them online and most investment sites, or brokerages have them.


Last edited by CafeGrande; January 28th, 2014 at 02:10 PM.
Reply With Quote
     
The following user says Thank You to CafeGrande for this post:
     

Old January 28th, 2014, 02:32 PM   #3005 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,330 since Jul 2011
Thanks: 634 given, 3,910 received

Futures Edge on FIO

Are you a NinjaTrader user?

 

CafeGrande View Post
This link: Historical and Implied Volatility

It will open on a 'tools & resources' tab, but you need to mouseover to the white tab heading, select calculators > advanced > binomial American model. Zero out anything related to dividends, make the interest rate zero or no more than .025% (it doesn't really matter).

The calculator you'll be using is from ivolatility.com. It's the same one they provide to their Advanced Futures Options customers, except the paid version has futures prices and DTE pre-loaded.

You can also register and use for free the calculator and other CME futures options related tools at Quikstrike.

Basically, you just want to make sure you're using a calculator that handles American style (early exercise) options properly. There are dozens of them online and most investment sites, or brokerages have them.

Is this the same thing?
I Volatility - Options Calculator

Here's what looks to be a good one.
Option Pricing Calculators by Peter Hoadley

Reply With Quote
     
The following 3 users say Thank You to ron99 for this post:
     

Old January 28th, 2014, 02:44 PM   #3006 (permalink)
Trading for Fun
St Paul, MN, USA
 
Futures Experience: Advanced
Platform: Abacus
Broker/Data: RJO, Interactive Brokers
Favorite Futures: Commodity Futures & Options
 
Posts: 189 since Jan 2014
Thanks: 108 given, 171 received


ron99 View Post
Is this the same thing?
I Volatility - Options Calculator

Here's what looks to be a good one.
Option Pricing Calculators by Peter Hoadley

Yes, when I clicked on the ivolatility free, basic calculator and plugged natural gas data into the pre-populated Microsoft fields, the results came back OK compared to my standalone futures options calculator.

I've purchased the Hoadley Excel add-in. Tons of value but you have to spend some time with it and customize it. It's a good learning tool. Works better (automated chain loading) with stock options than futures options.

Attached Thumbnails
Selling Options on Futures?-msft-override-ng.png  
Reply With Quote
     
The following user says Thank You to CafeGrande for this post:
     

Old January 28th, 2014, 03:23 PM   #3007 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,330 since Jul 2011
Thanks: 634 given, 3,910 received


MGBRoadster View Post
Do you have any way of estimating when that might happen so you can approximate your ROI?

This one will do that.


But there is this limit to using it.


Quoting 
You have reached the current maximum limit of 15 calculator points per hour.


Reply With Quote
     

Old January 28th, 2014, 04:13 PM   #3008 (permalink)
Elite Member
Steubenville Ohio
 
Futures Experience: Intermediate
Platform: OX, OEC, RJO
Favorite Futures: Options on Futures
 
Posts: 179 since Sep 2012
Thanks: 24 given, 198 received

Option Calculator

Here's the link for a nice free Excel option calculator:
Black Scholes Option Calculator

Reply With Quote
     
The following user says Thank You to Dudetooth for this post:
     

Old January 28th, 2014, 04:28 PM   #3009 (permalink)
 Vendor: www.cannontrading.com 
Los Angeles, CA /USA
 
Futures Experience: Master
Platform: Sierra, CQG, TransactAT
Favorite Futures: Crude Oil
 
Ilanlm's Avatar
 
Posts: 60 since Mar 2013
Thanks: 17 given, 36 received

I am a little late on this thread....BUT one of the best tools for options, greeks, "what if" calculations and much more is via CQG. Bad news CQG integrated client is approx. $700 per month, the good news is that they came out with CQG Q trader for $40 per month which has a LOT of the same option features.

here is a screen shot from my options menu:

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

Reply With Quote
     
The following 3 users say Thank You to Ilanlm for this post:
     

Old January 28th, 2014, 04:42 PM   #3010 (permalink)
Trading for Fun
St Paul, MN, USA
 
Futures Experience: Advanced
Platform: Abacus
Broker/Data: RJO, Interactive Brokers
Favorite Futures: Commodity Futures & Options
 
Posts: 189 since Jan 2014
Thanks: 108 given, 171 received



Ilanlm View Post
I am a little late on this thread....BUT one of the best tools for options, greeks, "what if" calculations and much more is via CQG. Bad news CQG integrated client is approx. $700 per month, the good news is that they came out with CQG Q trader for $40 per month which has a LOT of the same option features.

Agree on CQG Q-Trader features and price/value: $40/mo plus 25 cts/contract. The real time ATM IV is nice, so is RTD (export) and some basic option modeling, but they really need to work on their vol skew graphs.

A note for those using the original BS European stock option pricing model to price American style futures options: You'll lose some precision in the model's outputs. It's probably not going to be a big deal if you're not trading large quantities, but you may want to compare the two across various scenarios to see if it's close enough for you.


Last edited by CafeGrande; January 28th, 2014 at 04:48 PM.
Reply With Quote
     

Reply



futures.io > Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)
 

Trading Technologies: ADL hands-on

Dec 13

Normal webinar schedule resumes after the holidays

January

Ernie Chan: Risk Management

Elite only

Dedicated Trading Servers: Advantages/Disadvantages w/sam028

Elite only

An Afternoon with FIO member Massive I

Elite only

Leo Murphy: TBA

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 12:00 PM
Recommend futures, options Broker? sam1197 Brokers and Data Feeds 17 March 27th, 2013 01:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 05:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 01:40 PM
Zen-Fire Futures options tici88 Brokers and Data Feeds 1 July 30th, 2011 10:16 AM


All times are GMT -4. The time now is 05:58 AM.

Copyright © 2016 by 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 2016-12-11 in 0.15 seconds with 20 queries on phoenix via your IP 54.163.173.253