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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,836 / 5,734
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Selling Options on Futures?

Old March 27th, 2014, 02:28 PM   #3131 (permalink)
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ron99 View Post

Lately I have been selling ES puts 70-90 DTE for about 2.00 and trading out of them at 0.40-0.80. Hopefully about 30 days held. That usually increases the ROI to higher than if you ride them out to expiration.

Ron, do you wait for a down day on ES to sell puts? Based on what you said, I am guessing you are looking at the ESM41400 or ESM41410 puts. Delta is about 0.02 on these. Am I correct?

And once you are filled at around 2.00, would you then place a GTC order to buy back at say 0.60 or do you look at it daily and then decide what to do?

MJ888

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Old March 27th, 2014, 03:00 PM   #3132 (permalink)
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MJ888 View Post
Ron, do you wait for a down day on ES to sell puts? Based on what you said, I am guessing you are looking at the ESM41400 or ESM41410 puts. Delta is about 0.02 on these. Am I correct?

And once you are filled at around 2.00, would you then place a GTC order to buy back at say 0.60 or do you look at it daily and then decide what to do?

MJ888

Yes that is the option I am looking at. SPAN delta is .0205.

Last month I put on May 1400s for 2.40. If I get out of them today at 0.80 I would make 3.8% ROI. If I ride them to expiration I would get 2.4%.

I have done both, putting on ~0.60-1.00 GTC order or watching and picking day. I really didn't make any more by trying to pick a day.

I do seem to notice a higher ROI if you get out at 30-40 days held if the premium has dropped by more than 50%. That seems to be a sweet spot. Of course you don't always get that.

I used to try to wait for a down day, but in the last 1.5 years you rarely get them so I missed putting on positions. So I just put them on when I had room.

I do try to get them on before Friday am because weekend time erosion of the premium hits them some later on Fridays. But it is not as important for the options 75+DTE.

I also recently noticed that option premium was inflated with the coming of the March expiration. Higher volatility. I suspect that happens every quarter when the future contract expires.

When the March futures went off, futures' OI decreased by 1 million! That is the highest for the time I have been tracking it since summer 2012.

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Old March 27th, 2014, 07:03 PM   #3133 (permalink)
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Hello


The FOPīs is a very interesting Trading Strategy.
I also trade for 2 years Options Selling.
One can generate a monthly income provided that the volatility is higher otherwise the Riskio would be too high for me. I have 80% selling naked FOPS in the Grains,Softs,Metalls,Meat,Energy,Currencie,Interest Rates only in the Financials I've always used spreads.

Florian

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Old March 28th, 2014, 12:48 AM   #3134 (permalink)
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What is DTE?

Sorry, I'm a newbie currently learning to sell options in futures market (glad to have found this thread). I haven't finished reading all the posts in this thread. May I know what does DTE mean? What does it stand for? Thanks.

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Old March 28th, 2014, 12:54 AM   #3135 (permalink)
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DTE

Futures Edge on FIO
DTE = Days to Expiration

https://futures.io/options-cfd-trading/12309-selling-options-futures.html#post137184

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Old March 28th, 2014, 11:54 PM   #3136 (permalink)
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Hello fellow option sellers,

Glad to have found this forum with like minded people. I just wanted to introduce myself to you all. I've been trading options on futures as an option seller now for 7 years now. I've had my share of ups and downs from trading, but learned from my mistakes. Like most here, I started option selling as a result of reading James Cordier's books. I found them intriguing.

Over the years, I still utilize his strategy to a degree, but modified it to better suit my risk tolerance level, and needless to say, enhance overall returns while keeping my sleep at night. After reading this thread, I see my strategy is very similar to Ron99.

I look forward to sharing stories, and giving/receiving great advice from everyone.

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Old March 29th, 2014, 09:55 AM   #3137 (permalink)
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Zero85.

We look forward to hearing your good ideas. What commodities are you trading now?

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Old March 29th, 2014, 02:38 PM   #3138 (permalink)
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ron99 View Post
Zero85.

We look forward to hearing your good ideas. What commodities are you trading now?


I've been concentrating on S&P Futures (SPM14), selling put options. I know you like the E-mini S&P, but there's some good value with these. I've been selling 1400 puts for the Expiration May contract, and 1300 for the June month. Basically, for me to lose, the S&P would have to drop over 400 points in a matter of 46 days. Throw in weekends and holidays during that time, and its really about 30.

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Old March 29th, 2014, 04:53 PM   #3139 (permalink)
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ron99 View Post
Zero85.

We look forward to hearing your good ideas. What commodities are you trading now?

Also made small profits this year with Nat gas, sold calls at the peak last month, deep out of the money. I also went for coffee, last month, but was too early. I took a small loss there, but I plan to jump back in very soon because it seems like that commodity is range bound now.

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Old March 30th, 2014, 12:06 PM   #3140 (permalink)
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ron99 View Post
Zero85.

We look forward to hearing your good ideas. What commodities are you trading now?

How about you Ron, what are you trading these days? I need to build up my positions and diversify in a couple of more commodities.

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